Is solar power answer to energy crisis?

Is solar power answer to rural energy crisis?

Nurul Huda

This piece is in response to a news item which appeared in The Daily Star on August 10 under the headline "1m solar household systems by 2012 to achieve target".

The report said that over 2.30 lakh rural households have been brought under the solar power system in the last five years by Infrastructure Development Company Ltd (IDCOL) as an alternative source of energy. The report quoted the Executive Director of IDCOL, M Ehsanul Haque, as saying that they have set a target to install one million Solar Household Systems' (SHSs) solar panels by 2012 so that the government can achieve its target of providing electricity to all by 2020.

It needs to be recalled here that cyclone Sidr had a devastating effect on the southern region of the country and the government asked the participating organizations of IDCOL like Grameen Shakti, BRAC Foundation and RSP to stop collection of the credit instalments.

As a result, collection efficiency of participating organizations working in that region declined significantly. According to IDCOL, the target of the project will suffer if the country faces natural calamities like floods and cyclones.

The ability of beneficiaries varies from season to season and there are some examples of irregularities in repayment of instalments. The overall recovery rate of micro financing of the project has, however, been described by IDCOL as "satisfactory." IDCOL has its own teams to monitor the performance of its participating organizations of SHSs project. If it receives report of difficulties in running the systems, IDCOl sends its own teams to solve the problems. IDCOL officials claim that they have so far almost no report of SHSs remaining completely out of order.

"SHSs system, containing photo voltaic panel, battery, charge controller, solar lamp and switch, is a convenient mode of supplying power for small electrical loads such as lights, radio, cassette players and black and white TV," the report said.

The report also quoted the ED of IDCOL as giving a long list of benefits of SHSs, totally ignoring the challenges and difficulties IDCOL faces in the implementation process of the project. It also portrayed how the SHSs programme has brought about positive changes in the economy of the rural people following increase in working hours of small traders, weavers, tailors and hair dressers.

IDCOL is implementing the solar electrification programme in Bangladesh's remote areas far from the power grid since 2003 through 15 NGOs and Micro Finance Institutions (MFI) including Grameen Shakti, BRAC Foundation and RSP with financial support of different development partners.

According to IDCOL officials, the company has so far received US $80 million out of the total commitment of US $170 million from different funding agencies including World Bank, KFW (German Development Financing Bank) and Global Environmental Facility (GEF) through the government of Bangladesh (GOB).

Meanwhile, Asian Development Bank (ADB) and Islamic Development Bank (IDB) have reportedly shown interest to provide fund to IDCOL for infrastructure and renewable energy projects. World Bank and KFW are learnt to have expressed their interest in expanding their support to the GOB for expansion of SHSs.

As there has been increase in the worldwide demands for solar panels, IDCOL has been facing some challenges in importing solar panels from some of its traditional markets of Europe and countries like Singapore and China. The company at times cannot fulfil the market demands due to upward trend in the prices of the solar panels.

Among the SHSs providing NGOs, Grameen Shakti holds the lion share of solar panels, being installed in off grid rural areas.

Quoting Grameen Shakti the report said, so far they have installed 1.70 lakh solar panels with an average per month installation rate of 8,000 panels which is being increased at a fast pace.

The NGOs are providing a wide range of power generating capacity of Solar Photo Voltaic(PV) panels from 30 watts to 120 watts. For example, a 50 watt PV panel can run four LED lights and one black and white television, according to Grameen Shakti sources.

The price for the whole SHS system including PV, battery, wire and other accessories ranges between Taka 21,000 and Taka 70,000 and consumers can purchase a solar home system both in cash and credit.

Recently Grameen Shakti started distributing 10 watt panel at a cost of Taka 8,500 targeting the very poor families so that they can run two to three lights.

To enjoy the credit facility, a customer is required to pay a minimum 10 to 15 percent of the total cost of a system as down payment, and rest of the amount can be paid in instalments within two to five years.

According to IDCOL ED Ehsanul Haque SHSs is the fastest growing mode of obtaining power in the world's renewable energy sector. Different African countries have been showing interest in the renewable energy sector as an answer to rural energy crisis.

Meanwhile, some top government officials from Ethiopia had been to Dhaka once last year and again early this year for familiarization with the IDCOL project model. The purpose of the visits was Ethiopian government's interest to replicate IDCOL SHSs. It remains to be seen how African countries including Ethiopia replicate IDCOL SHSs project.

Let us hope that IDCOL and its participating organizations would regularly monitor and address the problems of SHSs beneficiaries with promptness and seriousness so that the purpose of the project is fully achieved.

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Gopinath S
Bangalore
9180 2669 8211
+91 99161 29728

India's wind power boom is failing to deliver!

India's wind power boom is failing to deliver

Posted: 12 Aug 2008

To all appearances, wind energy in India is booming – but it could very well be nothing but an optical illusion. For despite rising installed capacity and huge investments, India only uses a small proportion of the potential wind energy that has been installed.

In more technical terms, India does not manage to generate enough power from wind because of lower than average plant load factors (PLF).

This is reported in its latest exposé by Down To Earth magazine, a New Delhi-based science and environment fortnightly, published with assistance from the Centre for Science and Environment (CSE).

Wind farm, Maharashtra. Photo © Down to Earth

"We know that wind energy can and must play a critical role in securing our future needs," says CSE director Sunita Narain. In fact, over the past few years, the Indian government has given incentives to promote wind energy. Today, the country has over 8,700 megawatt (MW) of installed capacity. The country has also set a target to add another 10,000 MW in the 11th plan.

"But our review of wind energy in the country finds that there is an urgent need to reassess the current policies and incentives, so that the business of wind gets serious about generating power, and not just installing wind farms and reaping benefits from fiscal incentives," says Narain.

The study found that wind energy - while accounting for 6 per cent of the total installed power capacity in the country - only contributes 1.6 of the country's power. On average, across the country, the PLF of wind energy has increased marginally from 13.5 per cent in 2003-04 to 15 per cent, but there are states such as Gujarat and Andhra Pradesh, where wind energy is functioning at a PLF of less than 10 per cent.

Maharashtra has more than tripled its wind capacity in the past few years, but has actually decreased it in terms of its PLF. Today, in this energy-starved state, wind energy functions at a PLF of 11.7 per cent – a pathetically low figure compared to other states like Tamil Nadu and Karnataka, and certainly compared to global averages of 25-30 per cent.

Shadowy business

This analysis of new and renewable energy, , based on the government's own figures, shows that this investment in capital will be largely wasted unless policies change. "In the current scheme, which gives an accelerated depreciation benefit of 80 per cent and other tax incentives for installation of the plants, wind energy has become the business of cash-rich investors, who take advantage of tax benefits, and are not serious about generation of power," says Narain. It is no wonder, says CSE, that hotel companies, spinning mills and even film stars have invested in wind energy.

Down To Earth says the problem has been made even more pernicious because of the 'closed nature' of the business. The few companies that make wind turbines, monopolise the business of setting up the wind farms and then charge for a farm's operation and maintenance as well. As a result, there is no information on the cost of the capital infrastructure. Whereas in other parts of the world the cost of capital (which is the key determinant of the cost of power) has gone down because of economies of scale, in India it has climbed upwards - from Rs 4 crore per MW a few years ago to Rs 6 crore per MW today - roughly equivalent to a jump from US $10m to US$15 million per MW.

There is also little information about the cost of operation and maintenance or the expected efficiencies of a plant and how this can be increased. "The current business is not geared to generation of power and increasing efficiencies and reducing costs. This is clearly not good if we want wind energy to play an important role in our future energy security," says Chandra Bhushan, associate director, CSE and head of the Centre's industry unit.

"The Indian wind energy sector needs to be re-energised, and for that to happen, policy needs to change and get real," says Chandra Bhushan.

The key need, says the report, is to move towards a generation-based system of incentives (instead of an investment-based one). This can be done by by increasing the tariff paid to generate wind. Recent moves to do this are dismissed as "too little, too inadequate and too hesitant to change the business as it operates currently," ny Chandra Bhushan.

In India, utilities have to purchase a certain proportion of their energy from green sources like wind. This can be a powerful tool to promote green energy, says the report, but there is a lack of information about the scheme, a lack of penalty provisions if utilities do not meet the compulsory green quota, and low or non-existent green energy quotas set by some states.

Finally, the report also wants benefits of wind power to go to local people. While its generation needs land, it rarely gives back something in return to the communities who live in the vicinity of the wind farm. Local people, it suggests, could be helped by rent or sharing from the lease of the land.

"If not done democratically, the push for wind energy can well become just another alienating 'infrastructure' programme… It will be so understood, and so resisted, as just another brown - not green - energy programme," says Down To Earth.

To read the full report see www.downtoearth.org.in.

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Gopinath S
Bangalore
9180 2669 8211
+91 99161 29728

Rural India: tripped by shortages

 Rural India: Tripped by shortages

S. K. N. Nair

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The rural electrification programme will take the wires to the villages, but energy flows will remain meagre. Power supply to the villages will not improve until overall shortages are eliminated. And, given the scale of shortage, even the 'fastest' route will stretch beyond the short term, says S. K. N. NAIR.

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This hut-dweller is the beneficiary of a rural electrification scheme, but for most of rural India, the wait for a power connection is endless.

"Provide urban amenities in rural areas"— this was the former President, Mr A. P. J. Abdul Kalam's challenging vision for rural India. Road connectivity and electricity to all of the country's six lakh villages denote the starting point for turning Mr Kalam's vision into reality.

Two large national programmes are currently underway — the Prime Minister's Rural Roads Programme (Pradhan Mantri Gram Sadak Yojana) and the Rural Electrification Programme (Grameen Vidyutikaran Yojana) named after Rajiv Gandhi. Also, the current Plan for the power sector is structured around the aim of "Electricity for all by 2012".

The money invested in the roads programme could make an immediate impact on rural lives, but the case of electricity is complex. The scepticism springs from three factors.

Shocking trends

First, power shortages are worsening, hardly an encouraging sign for a country aiming to take electricity within reach of over 80 million more households (40 per cent of total) within the next four years. The all-India energy and 'peak power' shortages increased by a percentage point each in April-May this year compared to the corresponding period in 2007.

Second, the capacity-addition programme, already behind by about two years as of March 2007, is trailing the targets in the current Eleventh Plan as well. On latest indications, just around 25 per cent of the meticulously calculated five-year target of 78,577 MW will be added in the first two years of the Plan . Barring a miracle, electricity shortages will, therefore, continue beyond 2012. Compounding these two negatives is the positive trend of rising urban incomes. Why this should impact rural electricity adversely will need some elaboration, but first a look at the current status of village electrification.

Village electrification

About 105,000 villages of the total 593,732 (17.8 per cent) remained to be electrified as of March 2008. The Rural Electrification Corporation, a central undertaking, is co-ordinating the Grameen Vidyutikaran Yojana and as most target-driven, adequately-funded programmes gain added momentum nearing the deadline, the remaining gap can be substantially bridged by 2012.

However, connecting villages to the grid is quite distinct from actually delivering electricity to the rural population. For this, average hours of supply to villages already connected provide a reliable index. Sample data collected for a study on rural infrastructure by the National Council of Applied Economic Research in 2001 — a period when electricity shortages were at much the same levels as now — placed the average electricity 'outages' across states in rural areas round the year at almost 14 hours per day.

Bad enough as they are, such average numbers conceal the highly undependable and erratic nature of the supply which discourages rural households, short on purchasing power, from taking power connections.

Barring a few States that are better off electricity-wise (Chhattisgarh, Himachal Pradesh, Uttarakhand) conditions remain much the same today in most others. Maharashtra, now under severe power shortage, provides an illustration. The 'load shedding schedule' in force provides for daily power cuts of 10-12 hous in agriculture-dominated regions compared to three to six-and-a-half hours in other regions. In better-off States, rural areas suffer other forms of neglect. Tamil Nadu, normally free from power cuts, is carrying waiting lists of more than four lakh applications for rural power connections, some pending for over 20 years.

CII-Pune Model

Rural electricity supply will not improve until overall shortages are eliminated. The growing affluence in select urban centres is a factor to be considered. In a deficient supply environment, there is demonstrated willingness on the part of urban consumers to bear additional charges if they are provided with 'round the clock' supply.

The entry of competitive forces into the sector and the electricity trading facility now in place make this increasingly feasible.

Not surprisingly, Maharashtra set the trend three years ago with the so-called "CII-Pune model" that insulated consumers in that city from 'load-shedding' by using industrial captive power to support the grid when needed. In addition to the normal tariff applicable, consumers benefiting from the arrangement bear a 'reliability charge' at a rate set by the regulator.

In a significant recent change occasioned by rising demand that made the captive power support inadequate, the regulator has now authorised procuring of 100 MW (twice the quantum that captive power offered) for 12 hours daily from a private generating company in Maharashtra itself. This arrangement will continue till May 2009 ensuring that Pune remains free of 'load-shedding'.

Paying more for assured supply

Three more circles in Maharashtra have followed suit. To ensure 'zero load-shedding', Thane and Vashi (the latter covering the Navi Mumbai area) will purchase additional power of 175 MW through an 'electricity trader' by import from outside the State. The third case is of Baramati town which will adopt the original Pune model, of saving consumers from 'load-shedding' by drawing on industrial captive power. In all these cases, the 'reliability charge' would increase the average domestic tariff by around 10 per cent which the consumers find affordable. (Low-end domestic consumers are exempted from the charge).

Gurgaon, Haryana is likely to be the next to join this league and several other cities will be sure to follow. Consumers' paying more for assured supply fits in with economic theory. The market signals will steadily encourage new investments in capacity until equilibrium is reached. Judging by the flurry of activity in promoting new private power plants, this seems to be happening already.

The point is this: The gap between supply and demand is too wide and the gestation period of new projects is too long, so in the interim period till capacity draws level with demand, the additional power drawn will mean that much less supply to some other category.

About 10,700 MW of the Eleventh Plan target capacity-addition (14 per cent of total) is to come from the private sector, several of them wholly of the 'merchant power' variety or plants that earmark a share of their capacity for lucrative 'trading' purposes. An increasing proportion of the added capacity will thus be siphoned off by cities seeking uninterrupted supply.

Chances, therefore, are that the village electrification programme will take the wires to the villages, but energy flows will remain meagre. This makes it a matter of utmost urgency for rural households that overall electricity shortages are overcome fastest. But, given the scale of shortages to be overcome, even the 'fastest' route will stretch beyond the short term.

This urgency got hardly any notice in the controversy and debate over the Indo-US nuclear cooperation agreement with which the issue has a linkage. In "Reflections on the power mix", Business Line, July 19), this writer had argued that in order to bridge the demand-supply gap in a reasonable time-frame, the shelf of projects under execution needed to be significantly enlarged and further that increased nuclear power would fit into this scheme.

This was because coal-based plants, the mainstay for base-load power supply, were particularly prone to delays in implementation and nuclear plants could provide the needed additional volumes.

Shut out the nuclear option and the base-load supply would need to come almost wholly from coal. With all the problems in the coal sector (and port congestion if coal imports are to be increased substantially) this would mean that the shortage regime will prolong. So will Rural India's wait for reliable electricity supply.

"Electricity for all by 2012" is no longer a realistic aim. For reaching electricity to rural homes, the hard choice now is between the medium term and the long term. As the country's nuclear isolation could be ending soon, an opportunity opens up to ensure that the better option prevails.

(The author is a former Member of the Central Electricity Authority and a former Consultant to the National Council of Applied Economic Research, New Delhi.)

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Gopinath S
Bangalore
9180 2669 8211
+91 99161 29728