India May Mandate Conventional Power Producers To Invest In Renewable Energy

April 3rd, 2014 by Mridul Chadha

The Indian government may soon require conventional power project developers to install renewable energy projects within the premises of the fossil fuels based power plants. If the power ministry goes ahead with such a plan, the power project developers may have to set up renewable energy capacity equivalent to around 10% of the conventional power capacity within the premises of the power plant.

According to some forecasts, India could add about 10,000 MW of coal-fired power capacity by March 2017. This translates into 1,000 MW of renewable energy capacity to be added over the next three years.

India adds about 2,000 MW of renewable energy capacity every year. About 12% of the country’s power generation capacity is based on renewable energy sources. The total installed renewable energy capacity currently stands at over 30,000 MW; almost 10% of this is based on solar energy.

Solar photovoltaics (PV) seem to be the best bet for the conventional power project developers. Large conventional power plants have ample area to set up small utility-scale solar power projects. Some power project developers have already started investing in such solar PV projects.

NTPC Limited, the largest government-owned power producer with an installed capacity of over 42,000 MW, has plans to install over 300 MW of solar PV projects. A significant share of this capacity is scheduled to come up at its own coal-based power plants. The company plans to set up an aggregate capacity of at least 55 MW at six of its coal-based power plants across India.

Installing renewable energy projects within the premises of the conventional power plants may also make it easier for the power distribution companies to contract renewable energy-based electricity. Currently, in order to fulfill their Renewable Purchase Obligation (RPO), the distribution companies have to issue separate tenders seeking electricity from renewable energy projects.

With renewable energy projects being set up at the conventional power plants, distribution companies may be able to sign a common power purchase agreement (PPA) with a small percentage of electricity coming from renewable energy projects.

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