In an interview with Shobha Warrier, Kymal -- who is also the managing director of NEG Micon (India) Pvt Ltd -- talks about the role of renewable sources of energy and how India can achieve the goal of generating 10 per cent of its total energy requirement from such sources.
The theme of the Greenpower 2003 conference was 'Greenpower makes business sense.' Can you tell us how it makes business sense? The general talk is that it is expensive to generate energy from renewable energy sources like wind, solar power, etc.
Actually, it is not true. The fact is that the capital cost (to generate power from renewable energy sources) is comparable to thermal power or any other conventional form of power. . . which is roughly Rs 4 crore (Rs 40 million) per mega watt.
You must remember that the running cost is very, very minimal because, for example, wind is available free of cost. This compensates the low plant load factors of about 25 per cent compared to 65-70 per cent in the case of thermal power.
If you look at the life cycle costs of the machine, the cost of wind power comes to only Re 1 per KWH, whereas in the case of thermal power, you will not get it for less than Rs 3-3.50 per KWH (putting together all the costs, including the input costs on today's coal prices and oil prices).
Imagine what the price will be 15 years from now. But there is no price to wind!
That's why it makes sense to generate energy from renewable energy sources.
Can energy generated from renewable sources replace conventionally produced energy?
It can never replace conventional power. It can only be a supplement because, for example, wind power is not available on demand although we have in many parts of the country fairly regular wind for about 10-11 months a year.
Imagine in our country, 70 per cent of power is coming from thermal power plant. Suppose we take 20 per cent out of that and use only 50 per cent thermal power, we would be saving billions of dollars.
Now, technology has also improved so much that you can get quality power, almost the same quality as what you get from thermal power. We are also cheaper compared to conventional power.
In that case, is it only because of the initial capital expenditure involved in setting up a plant that people do not come forward to welcome greenpower? Or, is it lack of awareness?
This field is very new. So when we started, the capital expenditure costs were very high, but very rapid reduction in the costs have happened in the last 4-5 years, and technology upgradation also has happened.
If you look at the prices of coal and oil, they have gone up in the last 4-5 years.
So, on the one hand, conventional power costs have gone up, but on the other, wind power costs have dropped. Today, we are cheaper than them in the long term.
But, yes, lack of awareness is a major hurdle.
India has the 5th largest wind power installed capacity in the world. Is it possible to achieve much more?
Yes. In fact, we have a known wind power potential of 45,000 MW and we utilise only less than 2,000 MW. So, the potential is huge.
And, we are the people who need this power more than the developed countries because it is a luxury for them. They don't need this power, but they do it for the environment and long-term investment.
We need it because it is cheaper and we don't have oil. So, this is a natural hedge against inflation and foreign currency fluctuation.
Which areas have you mapped as wind power energy sources?
They are mostly on the west coast, extending from Kerala to Karnataka, Maharashtra and up to Gujarat. These states lie on the other side of the Western Ghats and that's where the wind is.
We can tap wind in Rajasthan and Andhra Pradesh too, but to a lesser extent. They are finding new areas in Uttaranchal, in Jammu & Kashmir, in Himachal Pradesh and in a lot of north-eastern states too.
Should India concentrate only on wind power?
Today, we have wind and biomass, two energy sources which are commercially viable. Solar energy is a little expensive; per mega watt, it comes to about Rs 14 crore (Rs 140 million).
It makes a lot of sense in the villages to use biomass, because -- in any case -- you have cattle dung and the leftovers from all the harvesting which can be very usefully converted to biomass.
At present India produces only 3.5 per cent of total energy generated from renewable sources, while it is 20 per cent in Denmark. Is it because of lack of awareness that we lag behind?
Actually, it is 25 per cent in Denmark. Yes, lack of awareness is one reason why we lag behind. Lack of legislation is another reason.
Today, all the guidelines are from the Centre and power is actually a state subject. So, what happens is, states do not listen to the Centre on these matters.
And what is holding us back is the inherent weaknesses of the state electricity boards.
Now, with the Electricity Act coming in, all that is going to change. It becomes a law now. When the regulatory commission decides what should be the tariff and how much should be sold, it more or less opens up the field.
The kind of revolution and investment you have seen in the telecom sector in the last 10 years is going to happen in the power sector now. I am quite sure that we will have at least 2,000 to 3,000 MW of conventional power added every year.
It could be foreign direct investment, it could be from our own resources. Imagine 10 per cent or 15 per cent coming from renewable sources. It is going to be a really exciting field for the power sector in the next few years.
The prime minister has set a goal of 10 per cent share for energy from renewable sources by 2012. Is it achievable?
Oh, yes! What the prime minister means is that 10 per cent of the power produced, not 10 per cent of the installed capacity.
The plant load factors in renewable energy are generally low. So, you should take into account the megawatts that are put into the grid and not the installed megawatts. That could be misleading.
So, 10 per cent in reality could mean about 30-35 per cent of installed capacity. Even that is not an upper limit, because Denmark already has 23 per cent coming from renewables.
And, their goal is to go up to 35 per cent in three years and maybe more after that because the technology is improving.
Speakers at the Greenpower conference said if we were to achieve the prime minister's goal of 10 per cent, we need Rs 60,000 crore (Rs 600 billion). of which he expected Rs 15,000 crore (Rs 150 billion) from the private sector. Will the private sector be interested in investing so much money in this sector?
All the investment that has taken place in the renewable sector so far has come from private players, in spite of the fact that power purchase agreements (PPA) that are already there are not really bankable and do not make commercial sense.
Still, there has been so much of investment.
Imagine the situation after (the enforcement of) the Electricity Act where PPAs become bankable. Then, the sky will be the limit.
Every entrepreneur would like to get return on investment and, today, you get better return on investment by investing in infrastructure than you would by putting in the bank.
And this is only the beginning. Tomorrow, we could have bonds, we could have shares and we could have so many things from the power sector coming out.
As the Chairman of Greenpower 2003, you said it is your aim to electrify all the villages in India through energy from renewable sources. What are your plans to achieve this?
This new law says you can produce and distribute your own power, and you don't need any license and you don't need to go to the government. This is going to be a tremendous boost, especially in the villages.
All the panchayats will now clamour for closed power generation system, the hybrid system where renewable as well as conventional are connected to each other. What you would do on a large scale, you can do it on a small scale.
You have a wind turbine and you can have a diesel generator set. When the wind is blowing, your diesel set is switched off. That is going to be a big market and that is how the villages are going to be electrified.
You will have distributed generation and distributed consumption. You are minimising the loss in power transmission because you are producing the power and utilising it there itself.
This will create local prosperity. This is going to be the real revolution. Like the green revolution, we will have a power revolution now.