Dr. Farooq Abdullah, Minister for New and Renewable Energy at European Business Group and Belgium, Luxemburg Business Association Renewable Energy Seminar

His Excellency Pierre Vaesen, Ambassador of Belgium, Mr. Rajeev Dhavan, Mr. Philip Lowe and Mr. Pavel Svitil, distinguished  participants and ladies and gentlemen.

It gives me a great pleasure to be with you this afternoon and share my views at the European Business Group and Belgium, Luxemburg Business Association Renewable Energy Seminar.  The organisers are doing a commendable work to facilitate greater dialogue and cooperation between European Business Houses and Indian industry. I understand such events are organized at regular intervals on various topics ranging from sector related issues to business opportunities in India.

As you are aware India is developing at a pace that is not easily matched by many others. However, the fact remains that our growth is constrained by Energy supply and availability. It is estimated that in order to sustain a growth rate of over 8% through the next two decades, we would need to grow our primary energy supply by 3 to 4 times and electricity supply by at least 5 to 7 times of our current consumption.

India is endowed with a substantial renewable energy resource base There is a potential of over 50 GW electric power capacity from wind energy. Solar photovoltaic and solar thermal energy has the potential to generate around 30-50 MW per square km. of area. Small hydro and Biomass could add another 40 GW capacity. Furthermore, there exists significant potential from decentralized distributed applications.

Ministry of New and Renewable Energy has a wide range of programmes on research and development, demonstration and promotion of renewable energy for rural, urban, commercial and industrial applications as well as for grid interactive power generation.  Ministry adopts a three-fold strategy for the development, promotion and use of renewable energy technologies across the country : (a) providing budgetary support for research, development and demonstration of technologies; (b) facilitating institutional finance through various financial institutions; and (c) promoting private investment through fiscal incentives, tax holidays, depreciation allowance and remunerative returns for power fed into the grid.

India today stands among the top five countries of the world in terms of renewable energy capacity. We have an installed base of over 22 GW, which is around 11 per cent of India’s total power generation capacity and contributes over 6 per cent to the electricity mix. Investment in renewables grew by 25% last year and contributed nearly $3.8 billion. India today ranks 8th in the world as far as attracting investments into renewable energy  is concerned. However, this is just the beginning. The National Action Plan on Climate Change mandates an increase in the share of renewable power in the electricity mix to 15 per cent by the year 2020. My Ministry has already developed an action plan that aims at accelerating the deployment of renewable energy. We have set up a target of around 72 GW of renewable power including 20 GW solar capacity by 2022.

In Indian context, I feel renewable energy has a major role to play in providing ‘energy access’ over and above energy security and environmental sustainability. Today, about 40 percent population in India have no access to electricity.  Studies indicate that the per unit cost of electricity increases by Rs.1 per kilometer of grid extension. It is when we begin to rethink the fossil-fuel led centralized electricity supply model that the significance of renewable energy becomes apparent. In its decentralized or standalone avatar renewable energy is the most appropriate, scalable and viable solution for providing power to thousands of villages and hamlets. In terms of speed of implementation, quality and cost, decentralized renewable energy could prove to be the most effective and democratic component of our village electrification programme. By providing energy access to be most disadvantaged and remote communities, renewable energy has become one the biggest drivers of inclusive growth.

Renewable energy applications have the great advantage of meeting decentralized needs other than rural electrification too. Over 25 GW power is currently generated by diesel. Over 1 million tonnes of furnace oil is used annually for meeting incremental process-heat requirements. Solar and biomass energy can save both by producing process heat as well as power. With oil prices going up and solar prices coming down, the tipping point is reaching for large scale off grid development. Quite naturally, industries facing power shortage, telecom towers using diesel, agricultural pump sets using diesel, large kitchens using LPG are promising candidates for this effort. All these applications have the potential of saving hundreds of thousands of litres of diesel, kerosene and LPG annually. They will spawn new financial and business models as well as an acceptance of service delivery in a distributed manner that supports local entrepreneurs with low cost funds.

Even though the distributed use of renewable energy is high on our agenda, we are not unaware of the enormous potential of renewable energy in generating and feeding power to the grid. In January 2010, the Government of India launched the Jawaharlal Nehru National Solar Mission (JNNSM). This is a unique and ambitious Mission that aims to establish India as a global leader in solar energy. The Mission aims to enable 20,000 MW of grid-connected solar energy being deployed in India by 2022 and 1100 MW by 2013 itself. Our Ministry has allotted 37 projects of 620 MW capacity through a transparent tariff discounting process. This has helped in reducing the average tariff by about 30%. Besides over 75 small projects of 1-2 MW each have been allotted for installation at the tail ends of the grid.

As a result of these new projects, we expect to have over 300 MW of grid connected solar power plants before the end of 2012. Entrepreneurs and developers-both local and foreign overwhelmingly participated in bidding process for the first phase of the projects. Manufacturers too have increased capacities and committed investments. The number of active module manufacturers is now 60 from 40, two years ago. Many new companies are planning to set up integrated manufacturing plants. Buoyed by this success, we are planning an even more ambitious Phase –II of the Mission. We have set up a totally autonomous Section 25 Company, the Solar Energy Corporation of India to aggressively pursue the planning and implementation of the Mission. We have amended the National Tariff Policy to introduce solar specific renewable purchase obligations, starting with 0.25% in the first phase of the Mission and leading to 3% by 2022. We have initiated trading of renewable energy certificates. All these steps will create many new opportunities outside the Mission.

Wind energy continues to contribute significantly to our renewable energy matrix. With over 15 GW installed capacity, India competes globally in manufacturing and deployment and occupies the fifth position in the world. Our policy framework in wind energy generation is extremely investor friendly. An attractive feed-in tariff, supportive regulatory regime, fiscal and promotional incentives and generation based  incentives provide a strong foundation for the growth of the sector. Indian manufacturers have come of age both in terms of the size of the turbine as well as technology. The newer wind energy generators have lower land requirements and lower O&M costs. There has been an increase in the hub heights of the wind turbines in order to harvest the wind potential more effectively. An indigenization level up to 80% has been achieved in machines.

Biomass, which is a carbon neutral fuel source of energy, holds considerable promise for India. Our surplus biomass material is estimated to be about 150 million tones; this could potentially be used to generate about 16 GW of power. Apart from providing relief from power shortages, power projects based on biomass would generate employment in our rural areas. They could also help the stabilization of electricity grid in such areas. We are working towards a National Bio-energy Mission. This mission will which will help device a policy and regulatory environment to provide a predictable incentive structure for rapid and large-scale capital investment in biomass energy applications and encourage development of rural enterprises for project development and sustainable operation of bioenergy systems. Dedicated energy plantations on degraded wastelands are one of the first steps in this direction.

The challenge before us in the renewable energy sector, generally and, in India, particularly is to reduce the per-unit cost of renewable energy.  Hence, there is a continuous need to innovate, to increase efficiencies and bring down costs.  Innovations can result from better research and indigenous technologies. That  is why, research and development in renewable energy is such a major area of action. I firmly believe that we need a whole new ecosystem involving business, academia and government in a symbiotic research effort. We need to involve prominent research and academic institutions as well as industry to develop technology roadmaps and initiate time-bound, multi-disciplinary research.

The Indian power sector has witnessed the presence of major European multinationals for a long time. The EU companies can play an important role to manage the growth of the energy demand from renewable energy sources. To tackle the challenges of energy security and climate change and energy access, EU companies can play a vital role to provide service to the Indian economy, specially the rural economy.

The European companies have occupied a special place for quality in the Indian mind. With the intensification of the competition in the renewable technology, quality and reliability should also be a dimension that should be used by the customers to select the technologies. There should be scope for the EU companies to be adapted in the Indian conditions so that the technologies can perform well under the Indian conditions.

We hope that European Business Houses would reprioritize and move towards having more investments in India in renewable energy sector. This is a win-win situation both for the business community as well as the Government which is duty bound to ensure to adequate supply of energy to its people.

I wish the Seminar a great success and hope the presentations and deliberations made by the experts including from my  Ministry will provide important information in developing bilateral and multilateral business and technical collaborations.

Thank you,

Jai Hind.