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									                                              BANGKOK AUG 06

POLICY FRAMEWORK STUDY FOR RENEWABLE ENERGY AND
           ENERGY POLICY DEVELOPMENT



    RENEWABLE ENERGY IS NOT ONLY SUSTAINABLE
              BUT ALSO AFFORDABLE

                         By

                  S. Chandrasekhar
                  Managing Director
          Bhoruka Power Corporation Limited
                   #48 Lavelle Road
                  Bangalore 560 001
                         India
                Tel:+91 80 2227 3285
               Fax: +91 80 2224 5246
          Email: sekhar@bhorukapower.com
               ENERGY MIX DECISION


AVAILABILITY                         AFFORDABILITY




               ENERGY MIX DECISION




                   RELIABILITY
              GENERAL PERCEPTION



 CONVENTIONAL POWER (FOSSIL FUEL) :-


      RESOURCE LIMITED – RELIABLE – AFFORDABLE


 NON CONVENTIONAL POWER (RENEWABLES):-


      RESOURCE UNLIMITED – NON RELIABLE – NON AFFORDABLE
               ENERGY SECURITY

            VISION OF PRESIDENT OF INDIA
                H.E. MR. ABDUL KALAM


   “WE CAN ACHIEVE ENERGY INDEPENDENCE BY 2030”


      - IF WE FOCUS ON RENEWABLE ENERGY SOURCES


      - IF WE INCREASE RENEWABLE ENERGY SOURCES
         IN ENERGY MIX FROM 5% TO 25%




THE FOCUS IS MORE ON ‘ENERGY SECURITY’ AND NOT JUST
‘COST ECONOMICS’
      NATIONAL ELECTRICITY POLICY –
       GOVERNMENT OF INDIA - 2005

CLAUSE RELATED TO RENEWABLES


CLAUSE 5.2.20:


FEASIBLE POTENTIAL OF NON-CONVENTIONAL ENERGY
SOURCES, MAINLY SMALL HYDRO, WIND AND BIO MASS
WOULD ALSO NEED TO BE EXPLOITED FULLY TO CREATE
ADDITIONAL POWER GENERATION CAPACITY WITH A VIEW
TO INCREASE,      THE OVERALL SHARE OF NON
CONVENTIONAL ENERGY SOURCES IN THE ENERGY MIX,
EFFORTS WILL BE MADE TO ENCOURAGE PRIVATE SECTOR
PARTICIPATION   THROUGH   SUITABLE  PROMOTIONAL
MEASURES.
NATIONAL ELECTRICITY POLICY – GOVT. OF
                INDIA
COGENERATION AND NON-CONVENTIONAL ENERGY SOURCES


CLAUSE 5.12.1:


NON-CONVENTIONAL SOURCES OF ENERGY BEING THE MOST
ENVIRONMENT FRIENDLY THERE IS AN URGENT NEED TO
PROMOTE GENERATION OF ELECTRICITY BASED ON SUCH
SOURCES OF ENERGY. FOR THIS PURPOSE, EFFORTS NEED
TO BE MADE TO REDUCE THE CAPITAL COST OF PROJECTS
BASED ON NON-CONVENTIONAL AND RENEWABLE SOURCES
OF ENERGY. COST OF ENERGY CAN ALSO BE REDUCED BY
PROMOTING COMPETITION WITHIN SUCH PROJECTS. AT THE
SAME TIME, ADEQUATE PROMOTIONAL MEASURES WOULD
ALSO HAVE TO BE TAKEN FOR DEVELOPMENT OF
TECHNOLOGIES AND A SUSTAINED GROWTH OF THESE
SOURCES.
  NATIONAL ELECTRICITY POLICY – GOVT. OF INDIA
CLAUSE 5.12.2:


THE ELECTRICITY ACT 2003 PROVIDES THAT CO-GENERATION AND
GENERATION OF ELECTRICITY FROM NON-CONVENTIONAL SOURCES
WOULD BE PROMOTED BY THE SERCs BY PROVIDING SUITABLE
MEASURES FOR CONNECTIVITY WITH GRID AND SALE OF ELECTRICITY
TO ANY PERSON AND ALSO BY SPECIFYING, FOR PURCHASE OF
ELECTRICITY FROM SUCH SOURCES, A PERCENTAGE OF THE TOTAL
CONSUMPTION OF ELECTRICITY IN THE AREA OF A DISTRIBUTION
LICENSEE. SUCH PERCENTAGE FOR PURCHASE OF POWER FROM
NON-CONVENTIONAL SOURCES SHOULD BE MADE APPLICABLE FOR
THE TARIFFS TO BE DETERMINED BY THE SERCs AT THE EARLIEST.
PROGRESSIVELY THE SHARE OF ELECTRICITY FROM NON-
CONVENTIONAL SOURCES WOULD NEED TO BE        INCREASED AS
PRESCRIBED BY STATE ELECTRICITY REGULATORY COMMISSIONS.
SUCH PURCHASE BY DISTRIBUTION COMPANIES SHALL BE THROUGH
COMPETITIVE BIDDING PROCESS. CONSIDERING THE FACT THAT IT
WILL TAKE SOME TIME BEFORE NON-CONVENTIONAL TECHNOLOGIES
COMPETE, IN TERMS OF COST, WITH CONVENTIONAL SOURCES, THE
COMMISSION MAY DETERMINE AN APPROPRIATE DIFFERENTIAL IN
PRICES TO PROMOTE THESE TECHNOLOGIES.
NATIONAL ELECTRICITY POLICY – GOVT. OF
                INDIA

CLAUSE 5.12.3:


INDUTRIES IN WHICH BOTH PROCESS HEAT AND
ELECTRICITY ARE NEEDED ARE WELL SUITED FOR
COGENERATION OF ELECTRICITY.        A SIGNIFICANT
POTENTIAL FOR COGENERATION EXISTS IN THE COUNTRY,
PARTICULARLY IN THE SUGAR INDUSTRY. SERCs MAY
PROMOTE ARRANGEMENTS BETWEEN THE CO-GENERATOR
AND THE CONCERNED DISTRIBUTION LICENSEE FOR
PURCHASE OF SURPLUS POWER FROM SUCH PLANTS.
COGENERATION SYSTEM        ALSO NEEDS      TO BE
ENCOURAGED IN THE OVERALL INTREST OF ENERGY
EFFICIENCY AND ALSO GRID STABILITY.
 NATIONAL TARIFF POLCY – GOVT. OF INDIA
CLAUSE 6.4:


NON CONVENTIONAL SOURCES OF ENERGY GENERATION, INCLUDING
COGEN.
       (1) PURSUANT TO PROVISIONS OF SECTION 86(1)(E) OF THE
       ACT, THE APPROPRIATE COMMISSION SHALL FIX A
       MINIMUM PERCENTAGE FOR PURCHASE OF ENERGY FROM
       SUCH SOURCES TAKING INTO ACCOUNT AVAILABILITY OF
       SUCH RESOURCES IN THE REGION AND ITS IMPACT ON
       RETAIL TARIFFS. SUCH PERCENTAGE FOR PURCHASE OF
       ENERGY SHOULD BE MADE APPLICABLE FOR THE TARIFFS
       TO BE DETERMINED BY THE SERCs LATEST BY APRIL 1, 2006.


IT  WILL   TAKE  SOME    TIME  BEFORE   NON-CONVENTIONAL
TECNOLOGIES CAN COMPETE WITH CONVENTIONAL SOURCES IN
TERMS OF COST OF ELECTRICITY. THEREFORE, PROCUREMENT BY
DISTRIBUTION COMPANIES SHALL BE DONE     AT PREFERENTIAL
TARIFFS DETERMINED BY THE APPROPRIATE COMMISSION
SU ST AINABLE EN ERGY BASKET




                               SUSTAINABLE ENERGY BASKET


                                       WIND
                                       SMALL HYDRO
                                       BIO MASS
                                       PHOTO VOLTAIC
                                       SOLAR THERMAL
                                       SOLID WASTE


                               AND OF COURSE NEW ONES SUCH AS FUEL CELLS, OCEAN
                               ENERGTY, TIDAL POWER ETC.
M OST SUITABLE TECH NOLOGIESFOR DEVELOPING EC ONOM IES




                                                         MOST SUITABLE TECHNOLOGIESFOR DEVELOPING
                                                                         ECONOMIES



                                                              WIND

                                                              SMALL HYDRO

                                                              BIO MASS

                                                              SOLAR APPLICATIONS


          GIVEN THE COMPULSIONS OF CONTAINING TARIFFS


                                                             REASON:      MATURE TECHNOLOGIES
BIGGEST ADVAN TGES OF RENEWABLE EN ERGY OTHER THAN FROM ECOLOGIC AL PERSPEC TIVE.




                                                                                    BIGGEST ADVANTGES OF RENEWABLE ENERGY OTHER
                                                                                    THAN FROM ECOLOGICAL PERSPECTIVE.


                    AVAILABILITY OF RENEWABLE RESOURCES MAINLY IN RURAL
                    AREAS

                    IMPROVES RURAL                                                              ECONOMY   –   GIVES   VALUE   TO   LOCAL
                    RESOURCES

                    INCREASES EMPLOYMENT OPPORTUNITIES – NEW AVENUES IN
                    THE RURAL AREAS

                    IMPROVES QUALITY OF POWER – DISTRIBUTED GENERATION

                     IMPROVES RURAL INFRASTRUCTURE – LOCAL FACILITIES BECOME
                    BETTER
R U R AL POWER – OTHER THAN POPULAT ION




                                                 RURAL POWER – OTHER THAN POPULATION


                                           IRRIGATION CANALS / RIVULETS – SMALL HYDRO POWER

                                           ABUNDANT WASTE LAND AND GOOD BREESE – WIND POWER

                                           AGRICULTURAL WASTE – BIOMASS POWER


                                          FROM VALUELESS RURAL RESOURCES TO HIGH VALUE RURAL
                                          PRODUCTS




                                            FROM POVERTY TO PLENTY, INCREASE IN RURAL GDP
                                                 RENEWABLE ENERGY – EMPLOYMENT GENERATION
R EN EWABLE EN ERGY – EMPLOYMENT GENERATION




                                              A. SMALL HYDRO (<10 MW Capacity)


                                                     During Construction : An average of more than 150 persons
                                                                             mostly locals employed for more than a
                                                                             year at a salary of USD 3 – 10 per day


                                                     During Operation : Permanent direct employment - 20 – 30
                                                                          persons at an average salary of USD 8-10
                                                                          per day


                                              B. BIOMASS (< 5 MW)


                                                     During Operation : An average of more than 200 persons
                                                                         regularly for collection of Biomass at an
                                                                          average salary of USD 3 – 10 per day
AD D ITION AL EM PLOYM ENT AVENU ES




                                      C. ADDITIONAL EMPLOYMENT AVENUES
                                            Due to availability of power , the following businesses could
                                            thrive:

                                                Rice Mills

                                                Flour Mills

                                                Oil Expeller / Extraction Units

                                                Small workshops for farm equipment and pump repairs.

                                                Ice making Units

                                                Small Cold Storages
R EN EWABLE EN ERGY – QUALITY OF POW ER




                                          RENEWABLE ENERGY – QUALITY OF POWER


           POWER GENERATED IN AND AROUND                               THE     AREAS   OF
          CONSUMPTION – DISTRIBUTED GENERATION


           IF POWER TO THE RURAL AREA IS COMING FROM A DISTANCEOF
          200 KMS THROUGH MULTIPLE LEVELSOF TRANSMISSION VOLTAGES,
          THERE WILL BE A SAVING OF NEARLY 10% IN TRANSMISSION LOSSES
          DUE TO DISTRIBUTED GENERATION.


           ADDED TO THAT THE QUALITY OF POWER IN TERMS OF VOLTAGE
          AND FREQUENCY WLL BE AT DESIRED LEVELS.


           LESSER   IRRIGATION    PUMPSETS    BREAKDOWN,                          HIGHER
          PRODUCTIVITY, LESSER EXPENDITURE FOR THE FARMERS
R U R AL IN FRAST RUCT URE IM PROVEMEN T




                                           RURAL INFRASTRUCTURE IMPROVEMENT




           BENEFICIAL FALLOUT OF IMPLEMENTING RENEWABLE ENERGY
           PROJECTS.


                                           IMPROVEMENT TO VILLAGE ROADS / NEW ROADS


                                           IMPROVEMENT TO EDUCATIONAL INFRASTRUCTURE
                                                    -IN OUR PROJECT SCHOOLS MORE THAN 1500
                                                     CHILDREN ARE STUDYING AT SUBSIDISED RATES.
PROGRAMS FOR HUMAN DEVELOPMENT


   - THROUGH SELF HELP GROUPS, VOCATIONAL
     TRAINING FOR WOMEN ETC.


  - WE HAVE TRAINED MORE THAN 1000 WOMEN IN
  VARIOUS TRADES LIKE TAILORING ETC. AND ALSO CREATE
  MORE THAN 100 SHG’S FOR MICROFRAME


 NET RESULT –
            ECONOMIC WELL BEING IN THE LONG TERM
         ECONOMICS OF RENEWABLE ENERGY
Sector                 Capital Cost       Cost of Generation
                       (US$ Million/MW)   (US Cent/kWh)


Small Hydro            0.9 to 1.3         5-6


Wind Energy            0.95 to 1.10       6–7


Biomass Power          0.8 to 1.00        5 to 6


Bagasse                0.6 to 0.8         4.5 to 5.5
Cogeneration

Biomass Gasification   0.6 to 0.8         5 to 6


Solar PV               5.21 to 6.25       18.80 to 41.70
       COMPARATIVE RETURNS
                             ( Value in US$)

            10 YR TERM         15 YR TERM
           TARIFF     IRR     TARIFF     IRR


GRID         0.075               0.074


HYDRO        0.065     10%       0.032         14%


THERMAL      0.052      9%       0.048         14%
             OBSERVATIONS



 PVT. SECTOR THE MOST IMPORTANT PLAYER IN
RENEWABLE ENERGY DEVELOPMENT WORLDOVER



 THE OTHER KEY STAKE HOLDERS ARE GOVERNMENT,
UTILITY, BANKERS & REGULATORS



 GOALS AND RISK PERCEPTIONS DIFFERENT FOR
EACH OF THEM
                   RISK PERCEPTION
    ENTITY            GOAL        RISK PERCEPTION               VISION



PVT. SECTOR       MAXIMISE                                      MED. TERM
              -   PROFIT          LOSS / BANKRUPTCY
                  LEAST RISK


BANKER        -   MAXIMISE        LOAN TURNING                  MED. TERM
                  PROFIT          NPA
                  LEAST RISK


UTILITY       -   MAXIMISE GEN.   HIGH  COST      OF   ENERGY   SHORT TERM
                  LEAST RISK      PURCHASE



REGULATOR     -   CONSUMER        HIGH COST TO CONSUMER         SHORT TERM
                  INTEREST



GOVERNMENT    -   ENERGY          MISPLACED                     LONG TERM
                  SECURITY        SUBSIDIES AND
                  EMP. GEN.       INCENTIVES
                  GHG RED
                  OTHER EXTERN
                  VIEW POINT
 NO SINGLE POLICY CAN SATISFY ALL THE STAKEHOLDER

 A BALANCED OUTLOOK SHOULD BE BASIS OF POLICY

 ANY POLICY SHOULD BE DRIVEN BY LONG TERM VISION

 EVERY RISK MITIGATION ADDS TO COST

 MOSTLY WE TALK OF RISK MITIGATION THROUGH FISCAL
POLICIES

 THERE ARE NON FISCAL POLICIES OF EQUAL IMPORTANCE

 RISK AVOIDANCE THROUGH MORE INFORMATION AND NOT
SIMPLY RISK MITIGATION THROUGH FISCAL MEASURES
SHOULD DRIVE POLICY INTERVENTION FOR PROMOTION OF
RENEWABLE ENERGY
  POWER PURCHASE – PRICE AND QUANTITY

 IN AN EMERGING SCENARIO GUARANTEE OF PURCHASE AT A
PRICE ONLY WAY TO FAST TRACK GROWTH

 RENEWABLE ENERGY GENERATION NOT TO BE SUBJECTED TO
MERIT ORDER PURCHASE OR OTHER CONDITIONALITIES



POLICY INTERVENTION – FEED IN TARIFF SHOULD BE THE POLICY
DRIVER TO ENCOURAGE RENEWABLE ENERGY TILL AT LEAST 10% RE
MIX IN OVERALL ENERGY IS ACHIEVED. SUBSEQUENTLY, ONE CAN
SWITCH OVER TO MARKET PROCESSES SUCH AS TENDERING,
RENEWABLE ENERGY PORTFOLIO STANDARDS ETC



THE HIGH RENEWABLE ENERGY SECTOR GROWTH IN INDIA DURING
1994-2004 WAS MAINLY DUE TO THE FEED IN TARIFF POLICY
           LONG TERM ENERGY COST

 LOW / NO INPUT RESOURCE COST FOR RENEWABLE ENERGY IN

ITS LIFE CYCLE

 CONTINUOUS INCREASE IN INPUT RESOURCE COST FOR FOSSIL

FUEL / CONVENTIONAL ENERGY GENERATION

 STUDIES INDICATE COST OF RE POWER WHICH IS 130%

INITIALLY DROPS TO 60 – 65% OF CONVENTIONAL ENERGY AFTER

15 YEARS AND CONTINUES LOWER THEREAFTER

 HIGHER THE RE MIX IN ELECTRICITY PORTFOLIO LOWER THE

AVERAGE TARIFF IN A LONG TERM SCENARIO
H OW T O M AKE A STAR T




                          HOW TO MAKE A START



 ENUNCIATE AN ENDURING RENEWABLE ENERGY POLICY


 LET IT BE INCLUSIVE TO ADDRESS EVERY STAKEHOLDER’S
CONCERN, BE IT THE PUBLIC,DEVELOPERS, BANKER’S OR
CONSUMERS.


 POLICY SHOULD HELP EVERY STAKEHOLDER’S VIEW TO BE
CONVERGENT AND NOT DIVERGENT.


 CREATE PUBLIC AWARENESS OF THE POLICY INITIATIVES
                               RECOMMENDATION
RECOMMENDATION




         RESOURCE AVAILABILITY STUDIES ON A LONG TERM BASIS IS KEY
         FOR VIABILITY PROJECTIONS ON A REALISTIC BASIS
          AUTHENTIC DATA NEED TO BE MADE AVAILABLE BY GOVERNMENT
         DEPARTMENTS.
          BANKS COULD HELP IN KEEPING LOCAL CURRENCY INTEREST RATES
         BELOW 10%.
          BANKS COULD ALSO HELP IN INCREASING THE LOAN TENURE TO 15
         YEARS WHICH COULD HELP IN KEEPING TARIFF’S DOWN IN THE INITIAL
         FEW YEARS.
          WORLD BANK THROUGH IFC COULD HELP IN ACHIEVING BOTH THE
         ABOVE OBJECTIVES THROUGH LONG TERM DEDICATED FUNDS.
          THE FUNDS COULD BE FOR DEVELOPMENT OF AT LEAST 200 MW
         RENEWABLE PROJECTS INITIALLY.
          RE PROJECTS COULD SERVE WORLD BANKS OBJECTIVES OF RURAL
         DEVELOPMENT AS WELL AS SUSTAINABLE ENERGY DEVELOPMENT
                            ABOUT US
                Bhoruka Power Corporation Limited
The Company is a leader in the Renewable Energy Sector in India.

The Company remains the first in the post independence period to set up
and operate a Hydel project in the private sector (Nov. 1992)

The Company spearheads environmentally friendly Renewable Energy
projects. Current portfolio is mainly Small Hydel and to some extent Wind.

By early next year the capacity will touch 80 MW and by 2007, 100 MW.
The Company has to its credit many honours and has received the ISO
9001and ISO 14001 Certifications. It is currently working for the ISO 18001
recognition

The Company is backed by a unique mix of Engineering Intellect, Project
Management Capability, Deep Industry experience and committed man
power.
PHOTOS




         MADHAVAMANTRI
 PHOTOS




          WIND PROJECT -
            JAISELMER
                           SRD KATTE


NERIA                      CHAYADEVI
Contact Details



       Mr. S. Chandrasekhar
       Managing Director
       Bhoruka Power Corporation Limited
       # 48 Lavelle Road
       Bangalore 560 001 – India
       Tel: +91 80 2227 3285 (D) 2227 2271(O)
       Fax: +91 80 222 45246
       Email: sekhar@bhorukapower.com
THANK YOU

								
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