Non-Conventional Energy: The Six Sources

In one line

Six sources, of which two now supply most of what India adds each year, and all six share the property that the fuel is free and the plant is everything.

The six

Solar. Photovoltaic conversion of sunlight to electricity, and solar thermal, which uses the heat. A flow resource, not despatchable, and available for a predictable part of the day.

Wind. Kinetic energy of moving air turned by a rotor. A flow resource, not despatchable, and variable on timescales from seconds to seasons.

Small hydro. Falling water at a scale below the threshold that separates it administratively from large hydro. A flow resource, partly despatchable where there is any pondage.

Biomass. Agricultural residue, wood and organic waste, burnt or gasified; and bagasse co-generation, which uses the residue of sugarcane crushing. Despatchable, and renewable only if the material is replaced at the rate it is used.

Geothermal. Heat from the earth's interior. Despatchable and continuous, and in India confined to a small number of prospective fields.

Tidal and other ocean energy. The rise and fall of the tide, wave motion and thermal gradients. Predictable but intermittent, and in India not deployed at scale.

The property they share, and what follows from it

The fuel is free and the plant is everything. For a coal station, a large part of the cost of each unit is the coal; for a solar or wind plant, almost the whole cost is the capital and its financing, and the marginal cost of the next unit is close to nothing.

Four consequences follow, and an answer built on them is better than a list of sources.

The tariff is a capital cost divided by an expected output. So the tariff falls when the equipment gets cheaper or the finance gets cheaper, and it does not move with a fuel price. The collapse of the solar tariff in India is the arithmetic of that sentence.

There is no royalty and no fuel supply agreement. Module II's entire apparatus of concessions, royalty and dead rent has nothing to work on, because there is no rent in a flow resource.

The land question replaces the fuel question. A solar park needs a large contiguous area, and a wind farm needs ridges and access; so the resource law that bites is land acquisition, land use conversion and, where the site is forest, the Van Adhiniyam.

And because the marginal cost is near zero, the source displaces others when it is available and cannot be commanded when it is not. That is the intermittency problem, and it is why the law had to create an obligation to buy rather than leaving it to the market.