Nurturing through a favourable FIT policy

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: Feed-in tariff (or, FIT) is the guaranteed tariff at which power/energy is purchased by a utility or an agency like a power transmission gridline authority. Energy regulators have mandated this as a support price at which a producer sells power/energy to a buyer. It is normally applicable for the buying and selling of renewable energy at a preferential rate, different from commercial and conventional energy, mainly thermal and large hydropower plants. FIT is set for a specific timeframe and is an instrument to encourage an upcoming industry. The advantage of FITs is extended to solar, wind, biomass, bio-energy and small hydropower renewable resources producing clean energy.

The philosophy behind encouraging renewable energy for speedy development is well known and dictated by the pressing demand to reduce fossil fuel-based thermal power plants from emitting greenhouse gases and contributing to global warming. The added importance of renewable energy is predominant in both developed and developing countries where energy consumption is growing rapidly. Countries like India are also motivated by their finite fossil-fuel reserves being subject to geopolitical changes and price volatility to search for alternative options, and renewable resources offer substantial potential.

In India, the growth of renewable energy is slow, ostensibly both because of the high initial investment, which has a heavy impact on fixed charges in the tariff, and also due to the low plant load factor, especially in the case of wind and solar power. This is equally true at the global level. Current estimates show that solar photovoltaic (SPV) power is about five times costlier and wind power nearly 1.5 times higher than conventional power.

But promoting them is essential and urgent given the demand- and supply-side management of the energy scenario, and also in the context of many adverse factors encountered in thermal power generation, which constitutes about 60% of capacity. The potential from both sources are huge, and in the case of solar power, whether through SPVs or concentrating solar power, it is estimated to be around 6,00,000 mw at a plant load factor of 14-16%. That of wind power is about 45,000 mw at plant load factors of 20-25%.