A review article on the Govt. of India's budget allocation and strategic plan for the renewable energy sector till 2017.

1. (Article published in www.sustainabilityoutlook.in on April 17th 2012
http://www.sustainabilityoutlook.in/content/review-government-india%E2%80%99s-strategic-plan-
new-and-renewable-energy-2011-17-1 )
Review of Government of India’s
Strategic Plan for New and Renewable
Energy for 2011-17
This article reviews the strategic plan of the Ministry of New and Renewable Energy, Government of
India particularly in context of the underlying drivers and highlights the key areas which will define the
success of the plan going forward.
Context
The strategic plan of the Ministry of New and Renewable Energy (MNRE), Government of India captures
the Government’s views on:
1. Vision, Mission and Objectives of the MNRE to achieve by the year 2022
2. Specific, measurable, achievable, realistic andtime-bound target of installation that comprises
both grid based and off-grid renewable energy systems
3. Aspiration of the MNRE and aligning them with strategic areas such as research and
development (R&D), human resource development, financing and marketing channels for
renewables
4. An implementation plan for the targets and monitoring and measuring process of its success
The ministry engages a multitude of stakeholders before firming up the strategic plan. In this article we
summarize the underlying drivers of the strategic plan and the broad areas it includes.
Key drivers of renewables
More than 40% of India’s population does not have access to energy. The plan specifically notes that
access problem is as much due to conventional resource scarcity and shortage of delivery as to costs of
energy services. It is expected that India, which is a country endowed with renewable resources, can
develop them to address both delivery (small scale renewable resources such as solar, wind are often
localized and offer a good solution to last mile delivery problem to remote locations) and scarcity
problems to energy access. Also going forward, technological advancement of new and renewable
energy systems is likely to make them cost effective compared to depleting fossil fuel resources.
The other imperative of indigenous renewable sources of energy is achieving energy security. More than
80% of India’s oil consumption is import based. This exposes an oil dependent economy to various geo-

2. political and volatile market risks. Developing renewable sources of energy and substituting the share of
fossil fuel in the country’s energy mix is a key long term strategy that the Government of India wishes to
pursue.
With this backdrop, the strategic plan has defined the vision of the MNRE as “to upscale and
mainstream the use of new and renewable energy sources in furtherance of the national aim of energy
security and energy independence, with attendant positive impact on local, national and global
environment.” Technical R&D, substitution of fossil fuel and increasing the contribution of renewables
to India’s electricity mix by 10 percent are identified as the Ministry’s mission till year 2022. The MNRE’s
desire to create an industrial manufacturing base for renewable technologies has also manifested in the
plan.
Targets and budgets for 2011-17 addition
Figure 1 and 2 illustrate the target addition of off-grid and grid based renewable energy applications
envisaged by the MNRE by 2017.
Solar PV, solar lighting and micro hydel systems of electrification seem most promising amongst various
technologies for off-grid application. 69% of total fund allocation requirement of INR13,711 crores is
envisaged for off-grid Solar PV based rural electrification systems.
Solar (both PV and thermal) dominates the targets for grid based addition too, with 65% of total fund
being earmarked for it. It is noted that the MNRE’s fund requirement for grid based renewables is
comparable to the off-grid applications, if not less.

3. Intervention areas
The plan talks about a number of areas that need strategic intervention. Five of them are highlighted
below –
1. Accurate and detailed assessment of renewable resources is identified as one key area for the
Ministry. The plan lays out a medium term priority objective to create/ update/ validate
database on renewable energy resources through a systematic approach in association with
expert institutions.
2. New R&D efforts and spending will be encouraged with an aim of reducing the cost of
renewable technologies. Solar PV, biomass gasification, energy storage and fuel cell are
specifically highlighted under it.
3. Opening new market channel and business models are regarded as the most pertinent for
scaling up renewables. The strategic plan notes current institutional framework around State
Nodal Agencies (SNA) and the lack of standardized process to avail government support for
renewable as bottlenecks for businesses to operate. Therefore the plan advocates
strengthening the SNAs and other elements of the delivery chain (for e.g. channeling of the
financial assistance) through capacity building and communication program. The plan has also
hinted that depending on programs, access to Government support will be made simpler
under a single handling authority (for e.g. Program Administrators (PA) will manage the
various initiatives under the National Solar Mission) rather than the traditional SNA
mechanism.
4. The plan talks about a number of financial instruments in order to address the market risk of
renewables such as introducing a risk guarantee fund, reducing cost of debt by offering tax
rebates and increasing term loan period. Besides it refers the role of a National Clean Energy
Fund (NCEF) with an initial outlay INR3000 crores per annum to support the clean energy
sector.

4. 5. Finally, the plan recognizes the current inadequacy of manpower capacity to meet the future
expansion target. To address the human resource need, the MNRE is currently formulating
sector-wise human resource development strategies with various academic and industrial
institutions.
Among above, deploying new financial instruments, opening new market channels and reducing
renewable system costs are set as “high” and “near term” priority areas by the Ministry.
Strategy 2011-17
Having established the areas of intervention, the plan discusses concrete issues that are being
adopted as strategy for 2011-17 periods to achieve the target capacity of renewable energy in the
country. Some of these are related to existing programs such as the National Solar Mission and Rural
Electrification that already gained momentum in the past few years. In addition, there are number
of specific strategies that could be significant for the industries in the near term. These are
enumerated below.
1. Promoting the concept of small power plants at tail-end of grid for both solar and biomass and
developing financial support structures for the same
2. Encouraging entrepreneurship for rural electrification, facilitating new industries such as agri-
residues, solar components and enabling availability of banks/ grant funds for such ventures
3. Identifying niche areas for application of off-grid renewable technologies and reducing
consumption of diesel
4. Developing new financial instruments including a ‘Risk Guarantee Fund’
5. Capacity building and awareness generation in green buildings and campuses
6. Pursuing the compliance of renewable energy purchase obligations (RPO) with regulatory
authorities and states
While promoting small power plant as tail-end generators to the centralized grid and associated RPO
possibilities may encourage physical scale up, providing platform for rural enterprises and new financial
instruments may encourage new business models in the renewable sector. The noticeable strategies are
the substitution of diesel generators in the energy mix which is only going to be more and more pressing
with rising prices of oil. Building sector is going to receive a push for cleaner source of energy for captive
uses. The last two forms of off-grid application are set to gain from the MNRE’s plan for including
renewables as a mainstream energy source.
References
The Ministry of New and Renewable Energy (2011) “STRATEGIC PLANFORNEW AND RENEWABLEENERGY
SECTORFOR THE PERIOD2011-17” [Available online, http://mnre.gov.in/file-
manager/UserFiles/strategic_plan_mnre_2011_17.pdf, accessed on 16th March 2012]