Renewable energies in India – short interview with Michael Wekezer

​1. Mr Wezeker, what do you think are the reasons why India is focussing so firmly on renewable energies? 

India’s economic growth, new technologies and a population density of already more than 1.3 billion increase the need for energy in the country. Besides, a nationwide supply of electricity cannot be always ensured; daily power black-outs are quite common in many parts of the country.
The country is increasingly relying on renewable energy in order to produce more energy in the future but also to reduce its dependence on imported fossil fuels.

Energy production from renewable sources (solar energy, wind energy, small hydropower, biomass) is continuously growing: from 18.2% in 2017 to an expected 40% in 2030 – this goal was accepted by the Indian government as part of the Paris Climate Agreement. Apart from China, the USA and Japan, India is one of the top renewable energy markets.

 

 

2. Why is solar energy so attractive to investors as compared to fossil fuels?

In India, a vast number of funding instruments is available from the federal government in Delhi and also from the federal states. Primarily, the public sector attempts to strengthen market demand. But also feed-in tariffs and direct subsidies have been additionally implemented. Moreover, the country boasts numerous large investments being a result of economic collaboration / development aid.

In the long term, in the area of renewables, India puts on solar energy as the future main energy source. The reason for this is that solar energy benefits from climate conditions providing solar radiation of 4 to even 7 kWh/ day (about 5,000 trillion kWh/year) with about 300 days of sunshine per year.

Prices for PV panels from both foreign and domestic production are constantly falling. The costs of solar power are decreasing thus leading to steady improvement in the competitiveness of solar power plants. A positive tendency which will be favourable to India’s ambitious plan can already be observed: In 2017, solar power was already partially cheaper than coal power.

 

 

3. An example: In which parts of the country are solar power plants currently used?

The list is long, just to name a few examples: one of the world’s largest solar power plants is located in Tamil Nadu in the south of India and generates electricity with a capacity of up to 648 MW. An even bigger solar park with a capacity of 750 MW is being built in the northern part of the Federal State of Madhya Pradesh in Central India. India is also home to one of the world’s largest wind farms which is being erected in the Indian Federal State of Gujarat and will have a capacity of 1,000 MW.

 
The world’s first fully solar-powered airport is located in Cochin in the southern Indian state of Keral.

 
In addition, nearly 7,000 train stations all over the country will be supplied with electricity from solar energy in the next 5 years. Further 2,000 train stations are planned to join.
Particularly newsworthy are developments in the area of electric cars which are supposed to replace diesel and petrol cars in India by 2030.

 

The area of roof-top installations has been completely neglected in India so far but will speed up soon – no wonder given the progressive electricity rates. The same applies to power plants producing electricity to ensure the on-site power of industrial plants.

 

 

4. This sounds very promising. But are there any snags?

Currently, the lack of storage capacities and transmission lines is still a big challenge to India. India lacks the necessary number of high voltage lines; moreover, funding shortfalls and the shortage of professionals lead to difficulties in expanding renewable energy sources. The purchase of the land necessary for infrastructural projects is often a difficult process. In addition, the Indian administration is inefficient in many situations and shows a very formalistic approach.

 

5. To conclude our interview, a brief recap: Are renewable energies in India attractive to foreign investors?

Due to the enormous pace of the development, the structural deficits and, first of all, the high demand for electricity, the electricity market in India offers lucrative business opportunities to foreign investors.

 

However, German companies have not been very successful at winning contracts and/or making bids for public tenders so far, in particular in the solar industry. This is mainly attributable to the fact that many German companies are not prepared for the Indian market, they offer rather expensive high-tech products than inexpensive technologies adjusted to the market preferences. So, in tenders their offers have so far failed to adequately respond to the local requirements and the wishes of customers. On its local energy market, India currently still needs technically simple solutions, robust power plants operating at low cost and requiring small maintenance effort.

 

Therefore, it is inevitable to be well-prepared before entering the market. This includes an examination of the relevant funding instruments and of practical issues such as selecting the investment location, selecting an Indian partner, if any, and also the engagement of an adviser who is familiar with the legal framework and Indian practices. The trend report “Wachstumsländer Erneuerbare Energien” [“Countries with potential for growth in renewable energies”] published by Rödl & Partner in late 2017 is also intended to serve this purpose. An informative read describing six countries with strong potential for growth in the RE industry.