News about Solar, Wind and alternative green power technologies

In India, the Central Electricity Regulatory Commission is a regulatory body that exists to promote competition and efficiency in the energy market, to improve supply, to encourage investment in power, and to advise the government. This body has passed new regulations that will encourage companies to increase their investment in renewable energy by providing greater returns on their investments. These new regulations mean that the amount of power generated from renewable energy sources is expected to increase, however the cost for this power is likely to increase.

The CERC (Central Electricity Regulatory Commission) framed the new regulations in conjunction with state regulatory bodies in September, and the new rules will be applied equally throughout the country. The profit on investment in renewable energy will increase by several percentage points, or between nineteen to twenty four percent, while the current rate of return is between sixteen to nineteen percent. 

Currently, energy producers must negotiate the return on investment and the energy rates with state regulatory bodies. With this new legislation, the CERC will set standard rates for renewable energy, and these rates will remain at a fixed level. This legislation will affect all energy produced by the wind, biomass, small hydel plants, and cogeneration (a type of energy produced by the burning of waste from sugarcane).  According to CERC officials, for each megawatt of energy, the capital cost will be Rs 4 crore to RS 7 crore.

The cost for renewable energy will be determined by including the capital costs, maintenance costs, and the guaranteed profits spread over the life of the project. Any reduction in tariffs can only be considered if the renewable energy minister at the CERC or the state government contributes to the costs by underwriting a portion.

The goal is to increase the amount of renewable energy so that the targets set by the national action plan on climate change will be met. Outlined in this plan are recommendations that by the year 2010, the state will purchase a minimum of five percent of their electricity from renewable sources. This represents a two percent increase over their current level of approximately three percent.

It is the intent of the new legislation to encourage investors to put their money into solar power so the goal of generating twenty thousand megawatts of solar power will be reached by 2010. 

Renewable energy created by the wind is growing, but the return on equity is lower, according to industry analysts. During the past three and a half years, the capacity of wind energy has doubled.  The average rate of return on equity investment in wind energy is about sixteen percent, which is lower than the return on investment in solar power. Wind turbine prices are expected to decrease over the next year, which will make the costs decrease to develop wind farms and lower the risk of investment.

Other energy sources, such as biomass and cogeneration, are considered riskier investments, as the amount of energy produced from these sources in uncertain. Thus, a higher rate of return on investment will be encouraging for investors. 

The average life expectancy for a wind power plant is projected to be thirteen years, and it is this time frame that is used to calculate state tariffs.  This new legislation that guarantees a higher rate of return will increase energy prices to the end user, and these added costs should not be passed on to the consumer.  Because the amount of renewable energy only makes up a small portion of total energy consumed, the price of electricity should only increase by a small amount.  However, as the proportion of renewable energy increases in comparison to other forms, the cost to the consumer will eventually increase.