Growing focus on renewable energy in Maharashtra

Vol 12, PW 5 (24 Jul 08) People & Policy

Maharashtra is putting the finishing touches to a new renewable energy policy, which investors expect to be announced within the next two weeks.

Going by the state’s track record, this new policy is widely expected to be as investor-friendly as the present policy, if not more. This is not surprising.

In November 2004, Maharashtra was the first state in India to set up a fully operational ministry for â€کnew and renewable energy’ with impressive results. Today some 2036-MW of the electricity generated in Maharashtra, the country’s most industrialised state, comes from renewable energy sources.

Wind energy generates 77% (1775-MW); another 262-MW comes from â€کbagasse’ (crushed sugar cane waste) co-generation; some 211-MW comes from small hydroelectric power stations; around 52-MW from agricultural waste; and 6-MW from industrial waste. Agricultural waste, â€کbagasse’ and to a lesser extent the Jatropha plant, are new focus areas for the state government.

From a low of 52-MW, state officials believe agricultural waste could potentially produce up to 781-MW of electricity. And from a low of 262-MW, they believe â€کbagasse’ could potentially produce 1250-MW.

Permission to generate an additional 380-MW from agricultural waste has already been granted, of which 50-MW is commissioned. Enthusiastic sugar producing cooperatives in the Maharashtra countryside who want to enter the electricity generation business, but who don’t have any money to invest, can draw on a venture capital (VC) fund set up by MEDA in partnership with Indian investment bank ILFS.

Under this scheme the VC fund takes a 20% stake in all new â€کbagasse’-based electricity generation projects. MEDA has invested Rs218cr ($54m) in the VC fund and ILFS has invested Rs200cr ($50m).

Based on the number of units sold into the electricity grid, renewable energy makes up 4% of Maharashtra’s energy basket. Solar energy, an obvious source of electricity in sun-drenched India, is less popular because of the high cost of photo voltaic cells and the electricity they produce, which works out to more than Rs17/KwH.