The Importance of Clean Energy Solutions Panel

1BARRIERSTOFINANCINGINDIANRENEWABLEENERGYTheImportanceofCleanEnergySolutionsPanelINAUGURAL“GREENINDIA”SUMMITU.S.CHAMBEROFCOMMERCEWASHINGTON,DCOCTOBER15,2008MarkJ.Riedy,Esq.AndrewsKurthLLP1350IStreet,N.W.Suite1100Washington,DC20005(202)662-2756(T)[phone](C)[e-mail](includingnearly30,000MWofcaptivegeneration)isgeneratedinIndia,including12,195MW1/ofrenewablepower.Thispowercapacityalsoconsistsof92,565MWofthermalpower,36,03MWofhydroelectricand4,120MWofnuclearpower.However,largerhydropowerisscored/countedoutsideoftherenewablepowerfigures.TheGOIseekstoconvertthiscaptivepowerfromsubstantiallydiesel-fired,tobiofuels-fired,units.Italsoseekstoconstructapproximately60,000MWofnewnuclearpowerby2030asaresultofthefinalizationoftheUS-Indiaciviliannucleartechnologytransferdeal.B.India’sinstalledcapacityforwindpoweris7,500MWwiththepotentialforapproximately45,000MW.Purchaserscanbuywindmachinesof500KWto1000KWofftheshelfinIndia.TheGOIMinistryofNew&RenewableEnergywillprovideanewwindincentiveofRs.0.50(U.S.1cent)perkwHuptothefirst49MWofoverallnewproductionwiththeexpectationtoraisethecapsignificantlyovertimetofurtherencourageadditionalnewconstruction.1/Renewablepowerincludessmallhydro,biomassgas,biomasspower,urbanandindustrialwastepowerandwindenergy.3C.Indiaalsohascommencedamajorsolarpowerinitiative.ItisencouragingtheinstallationofSolarPhotoVoltaictechnologysystemsforthegenerationofelectricityandSolarThermaltechnologyfortheproductionandcaptureofheat.SolarThermalPowerPlantsareexpectedtobeconstructedinthenearfuture.SolarPhotoVoltaicpanelsarebeinginstalledonrooftopsasthinsheetspluggedintohouseholdwiringsystems.D.IndiahasanewBiofuelsPolicywithanemphasisonbiodieselproductionfromjatropha.ThebiodieselmarketistargetedtobeatnearlyU.S.$32Billionininstalledprojectsby2017.E.Today,approximately100milliongallonsperyearofbiodieselcapacity(versusnearly2.61billiongallonsperyearcurrentcapacityintheU.S.)and767milliongallonsperyearoffuelethanolcapacity(versusapproximately13billiongallonsperyearcapacityintheU.S.byyear’send2008)existinIndia.ByDecember31,2007,India’sfuelethanolcapacitywasprojectedtobeinarangeof1.3-1.6billiongallonsperyear.Biodieselcapacitywasprojectedtobemorethan150milliongallonsperyearatyears’endin2007.Thesearenascentindustries,entirelybasedintheprivatesector,withtremendousupsidepotential.4F.The11th5-YearPlanhasrequired77,778MWofnewelectricpowertobebuilt,including10,000MWofrenewablepower.Inthe10th5-YearPlan,Indiabuilt24,000MWofitsrequired34,000MWofelectricpower.TheGOIhasstatedthatthe11th5-YearPlanforinfrastructure,includingpower,wouldrequireapproximately$492Billion(ofwhichapproximately$240Billionwouldrepresentdebtand$140Billionofthisdebtwillcomefromtheprivatesector).TheGOIhasnotsetatargetforbiofuelsinthe11th5-YearPlan.G.TheGOI,sinceearly2000,repeatedlyhassetfuelethanol-blendmandatesonaregionalbasisforpetrol.However,ithasnotcarriedthemoutinanydedicatedmanner.Nevertheless,asofNovember1,2007,theGOIhadmandatedfuel-ethanolblendinginpetrolmandatorynationwideat5%.AsofOctober1,2008,themandatoryblendpercentagewastoincreaseto10%.However,theGOIrecentlydelayedimplementingthismandate.TheGOIintendsafurtherincreaseofthisblendmandateto20%by2017.TheGOIdoesnothaveasimilarmandateforbiodiesel.Nevertheless,ithasconsideredamandatedbiodieselblendrangeof5%to20%indieselfuel.5H.ThereisnolegislationinIndiawhichdealsexclusivelywithrenewableenergy.ThissectorisgovernedbytheprovisionsoftheElectricityAct,2003(“Act”)whichistheprincipalstatutegoverningtheelectricitysectorinIndia.TheNationalElectricityPolicy,2005andtheTariffPolicy,whichwereformulatedintermsoftheAct,containprovisionsforthepromotionofrenewableenergysources.I.In2005,theWorldInstituteforSustainableEnergy(“WISE”)(aPune-basednon-profitorganization)togetherwiththeNationalLawSchool,Bangalore,prepared“The(Draft)RenewableEnergyAct”.TheGOIMinistryofNewandRenewableEnergyhasestablishedatechnicalcommitteetomovethisprocessalong.ThedraftlawcomprisesfiscalandinstitutionalmechanismstodeveloprenewableenergyinIndia.OnefeatureistoinstallPhotoVoltaicSolarSystemsonallGOIandStategovernmentbuildingsby2012.61.Sincethereleaseofthemodellegislation,WISEhasheldseveralseminarstodiscussthemodellegislation.Italsohasconstitutedaworkinggrouptofurtherdevelopandrefinethelegislation.WISE’sinitiativefortheModelRenewableEnergyLawforIndiafurthermorehasgarneredsupportfromtheRenewableEnergyandEnergyEfficiencyPartnershipandtheRenewableEnergyandInternationalLawProject.2.AdelegationledbyDrPramodDeo,Chairman,MaharashtraElectricityRegulatoryCommissionandG.M.Pillai,theFounderDirectorGeneral,WISE,submittedthemodellegislationtoVilasMuttemwar,MinisterforNewandRenewableEnergy,GovernmentofIndiainAugust2007.Thecurrentdraftproposestoincreasethetargetforelectricitygenerationfromrenewablesto10percentby2010(asagainst2012currently)and20percentby2020,ofthetotalelectricitygeneratedinthecountry(andnotasapercentageofinstalledcapacity).Thus,thisdraft