New Delhi: India may explore options to make it compulsory for conventional power project developers to build renewable capacity at the same location, a move that can provide an impetus to eco-friendly electricity.

“Innovative policy interventions are required for promoting renewable energy in the country," power secretary Pradeep Kumar Sinha said at a conference on Thursday. “For example, whoever is setting up a conventional power plant also sets up a 10% of the total installed capacity as renewable and pool the costs. Can we make it mandatory?"

Besides the fact that India is heavily dependent on oil and gas imports, coal imports are also rising, which is adding to the pressure on the current account and fiscal deficits, Sinha said.

India’s national action plan on climate change recommends the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020. It has an installed power generation capacity of 237,743 megawatts (MW), of which 12.4%, or 29,462.55MW, is renewable.

“There has to be widespread consultations," Sinha said. “It is just an idea now."

If implemented, the move can boost renewable energy capacity in the country. Of India’s installed power generation capacity, 163,304.99MW is thermal. Thermal coal-based power capacity is expected to increase from 140,723.39MW to 150,000MW by FY16, according to UBS Global Equity Research.

There is a need to have regulations that will integrate conventional and renewable power generation as India’s overdependence on coal needs to be reversed, Sinha said.

“We will have to promote hydropower generation and wind energy," he said.

India, which is highly dependent on imports to meet its energy demand, has an energy import bill of $150 billion. This is expected to reach $300 billion by 2030, requiring a $3.6 trillion payout by 2030. India plans to restrict its current account shortfall to $50 billion in the year ending 31 March. It was $88 billion a year ago.

“We are adding around 20,000MW every year. This has also put pressure on electricity transmission," Sinha said.

India has an inter-regional electricity transmission capacity of 37,000MW, of which only 17,000MW can be transferred. Investments in transmission and distribution have not kept up with investments made in power generation.

If the growth of economy remains as it is, India will require to import more than 83% of its energy needs by 2045, Sinha said.

India is the world’s fourth largest energy consuming nation and imports 80% of its crude oil and 18% of its natural gas requirements. The country trails the US, China and Russia, accounting for 4.4% of global energy consumption.

India’s energy demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) today, to around 1,500 mtoe, according to the oil ministry’s estimate.*