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Green energy management in India management

Green energy
in
for environmental benchmarking: India

from concept to practice

Deepak Sangroya 1329
Jindal Global Business School, OP Jindal Global University, Sonipat, India
Received 12 November 2019
Gaurav Kabra Revised 27 January 2020
National Institute of Industrial Engineering, Mumbai, India 6 March 2020
Accepted 14 March 2020
Yatish Joshi
Motilal Nehru National Institute of Technology, Allahabad, India, and
Mohit Yadav
Jindal Global Business School, OP Jindal Global University, Sonipat, India

Abstract
Purpose – This study examines various aspects of green energy management operations in India and reports
the current state, potential avenues and barriers for green energy management.
Design/methodology/approach – This study performs an extensive literature review and covers the
several aspects of green energy management operations.
Findings – The findings report the current state of various aspects of green energy management operations
such as: procurement, manufacturing and distribution and provides the viable business models. It further
explains the various facilitators and barriers of green energy management and reports the opportunities and
challenges that exist in developing and managing green energy supply chain.
Originality/value – The study is pioneer in providing a comprehensive view of developing and managing
green energy operations in India. The study is useful to various organisations on drafting strategies to
effectively adopt and manage green energy. The study is also useful in policy formulation for promoting green
energy use. This article also set as a base for future researchers working in the area of green energy.
Keywords Green energy, Green electricity, Renewable energy, Government regulations
Paper type Research paper

Introduction
With the increasing environmental problems various nations across the world have
instigated making efforts to curtail the detrimental effect of their policies and practises on the
environment (Joshi et al., 2019). Environmental benchmarking is defined as the benchmarking
for the environmental performance for continuous improvement (Boks and Stevels, 2003).
The concept is gaining popularity and companies across the word are increasingly trying for
environmental benchmarking of their processes. There has been an increasing ecological and
environmental concern among organisations and they are exploring means running green
and sustainable operation operations (Mangla, 2019). Moreover, people all over the world are
also stressing on proper coordination between economic and environment growth (Song and
Wang, 2017). Due to this increasing environmental concerns organisations concentrating on
maintaining proper ecological balance (Mangla et al., 2013). Energy management is crucial
towards environmental benchmarking related to any activity. Energy has been noted as most
crucial input in all areas of a country for its sustainable economic development (Luthra et al.,
Management of Environmental
2015). Tackling challenges related to logistics, distribution is vital for managing the Quality: An International Journal
operations across any field (Mangla et al., 2019) and it holds true in managing energy sector. Vol. 31 No. 5, 2020
pp. 1329-1349
Energy sector in India is largely dependent on nonrenewable resources, which causes a great © Emerald Publishing Limited
1477-7835
cost to the environment. There is a need to shift to renewable energy sector and focus on green DOI 10.1108/MEQ-11-2019-0237
MEQ energy. Indian electricity sector is going through a period of vital changes and facing
31,5 significant growth in various areas (Joseph, 2010). For past few years, renewable energy has
started to play an important role in the energy security of the nation as conventional energy
sources, such as, coal have become scarcer and expensive to import (Kathuria et al., 2015;
Mangla et al., 2020). At a time when universal access and 24*7 electricity supply are the
priority for the Indian government, new energy technologies and sources to meet this
requirement are largely coming from green energy (Lahimer et al., 2013). Indian government
1330 has set ambitious targets to transform the energy mix with a goal of 175 GW of renewable
energy by 2022 and thus has an ideal opportunity to diversify its energy mix due to its huge
potential of solar and wind energy (Thapar et al., 2017). India’s solar energy potential of 5,000
trillion kWh per year is highest in the world (Kumar et al., 2010; Luthra et al., 2016). According
to a study conducted by Berkeley lab, India’s potential for wind energy ranges between
2,006 GW and 3,121 GW which is much larger than the official assessment of 102.78 GW
(Sahu et al., 2013). With this potential, India could become world leader in power generation
by deploying the nationwide solar and wind energy projects. The national budget of 2015 has
announced a five-fold increase of green energy targets to 175 GW (100 GW solar, 60 GW wind,
10 GW biomass and 5 GW) by 2022, supported by an extensive budgetary allocation (Thapar
et al., 2017). However, as shown in Figure 1, the existing electricity generation capacity is
largely dominated by conventional energy sources such as coal (192 GW, 70% of total
capacity), followed by large hydro (42 GW, 15%), renewables (36 GW, 13%) and nuclear
(6 GW, 2%). India’s central and state government has taken various initiatives to harness
renewable energy in the country to deal with energy security and all together reducing the
carbon emissions (Rohankar et al., 2016). Due to this, Indian green energy industry has made
significant growth from just 1.15% in 2002 to 23.1% of the total generation capacity in 2019
(see Table 1). However, due to ever increasing demand of sustainable energy in India, there is
a need to study the opportunities and challenges in adopting renewable resources as one of
the major source for meeting fulfilling energy requirements in the future.
India is a vast market and holds substantial potential for adoption of green energy.
However, still the green electricity constitutes a very small portion of the total consumer
needs (Chandel et al., 2016). There is a need to enhance the production and supply of green
electricity to meet these needs. Hence it is vital to understand the overall scenario,
environmental factors, design, business models and financing models for production and
management of green energy in India.
In light of the discussion above, the current study seeks to fulfil the following research
objectives:

6
42

Thermal
43 Green
Large hydro
Nuclear

Figure 1. 211
Installed generation
capacity of India
 Thermal
Green energy
Year Hydro Coal þ Lignite Gas Diesel Nuclear RES Total RES share management in
India
2001–2002 26,269 62,131 11,163 1,135 2,720 1,628 105,046 1.15%
2011–2012 38,990 112,022 18,381 1,200 4,780 24,504 199,877 12.26%
2012–2013 39,491 130,221 20,110 1,200 4,780 27,542 223,344 12.33%
2013–2014 40,532 145,273 21,782 1,200 4,780 31,692 245,259 12.92%
2014–2015 41,267 164,636 23,062 1,200 5,780 35,777 271,722 13.17% 1331
2015–2016 42,783 185,173 24,509 994 5,780 42,849 302,088 14.18%
2016–2017 44,478 192,163 25,329 838 6,780 57,244 326,833 17.51%
2017–2018 45,293 197,172 24,897 838 6,780 69,022 344,002 20.06% Table 1.
2018–2019 45,399 200,705 24,937 638 6,780 77,642 356,100 21.8% Renewable share in
2019–2020 45,399 205,255 24,937 510 6,780 84,400 367,281 23.1% total installed capacity

(1) To understand the various aspects of green energy supply chain management (i.e.
procurement, production capacity, demand and design).
(2) To understand the viable business models of green energy management and various
facilitators and barriers of green energy production and adoption in India.
Thus, this paper attempts to review the various facets of green energy management in India
and provide information about the present condition of green energy supply chain, green
energy business models, economic criteria for green energy management, major
achievements, existing business models, current government policies and economics of
renewable energy and future potentials of their uses. It depicts an overall picture of green
energy resources and position of India on the global map in harnessing these resources.
The article is arranged as follows: section 2 discusses the global scenario of green energy
management. Section 3 reviews the various facets of green energy management in India,
including the technological development, production capacity, design, infrastructural
requirements and financial aspects. Sections 4 discusses the major findings of the review.
Sections 5 provides major policy implications. Section 6 provides conclusion and future
research directions.

2. Global scenario of green energy:

According to International Energy Agency (IEA), China is having a largest installed capacity
of green energy in the world and accounts for 404 GW world’s total installed capacity. In this
country, installation of green energy has grown rapidly, from 62.7 GW to 211.4 GW by 31st
March 2019. Tables 2 and 3 shows the leading countries in world in terms of installed
capacity. Among all technology, wind energy got the maximum attraction all over the world
having total installation of 591 GW followed by solar energy with 505 GW. In fact, China is
also the leader in wind energy with installation of 211 GW adding significant capacity every
year. In India wind and solar energy are leading technologies by installation after excluding
hydropower. In the following sections, we are going to understand the reasons for attraction
for wind and solar energy in India.

3. Green energy sector in India

In recent years, demand for energy has increased substantially in India, due to the rising
economy, growing urbanisation and change in the standard of living (Sangroya and Nayak,
2015). During 2014–2015, electricity generation has for the first time crossed one trillion units
with 1,048 TWh growing by 8.4% over previous year making India the third largest
MEQ The United The United World
31,5 Technology China States Germany India Japan Kingdom total

Biopower 17.8 16.2 8.4 10.2 4.0 7.7 130

Geothermal power 0 2.5 0 0 0.5 0 13.3
Hydropower 322 80 5.6 45 22 1.9 0.5
Ocean power 0 0 0 0 0 0 0.5
1332 Solar PV 176 62 45 33 56 13 505
CSP 0.2 1.7 0 0.2 0 0 5.5
Wind power 210 96 59 35 3.7 21 591
Total renewable 727 260 119 124 86 44 2,378
Table 2. including hydropower
Renewable energy Total renewable 404 180 113 78 64 42 1,246
capacity worldwide excluding hydropower

The United The United World

Technology China States Germany India Spain Kingdom total

2011–2012 62.7 46.9 29.0 16.0 21.6 6.5 238.0

2012–2013 75.6 60.0 31.3 18.4 22.7 8.4 282.4
2013–2014 91.4 61.1 34.2 20.1 22.9 10.7 318.5
2014–2015 114.7 65.9 39.1 22.5 22.9 12.4 369.5
2015–2016 145.1 74.4 44.9 27.1 23.0 13.6 432.4
Table 3. 2016–2017 168.7 82.1 50.0 28.6 23.0 15.0 487.6
Wind energy capacity 2017–2018 188.2 89.0 56.1 32.8 23.1 18.8 539.5
worldwide 2018–2019 211.4 96.7 59.3 35.1 23.4 20.9 591.5

generator globally after Japan and Russia (Rogers and Williams, 2015, CEA, 2016). In last few
years, as depicted in Figure 2 the installed generation capacity of India grown rapidly and
reached 362 GW in 2019. The 12th five year plan has a target to add 80 GW new generation
capacity between 2012 and 2017, which was well completed by installing 102 GW before the
end of year 2017 (CEA, 2016). However, as mentioned earlier most of the electricity is
generated by coal, which is not only non-renewable but also damaging the environment (Kar
and Sharma, 2015). In case of emerging economies like China and India, the emission of CO2

350
302
300
271.7
245.2
250
223.3
199.8
200

150

100

Figure 2. 50
Generation capacity in
India (in GW) 0
2012 2013 2014 2015 2016
from fossil fuels has increased more than 50% from its level in 1990 (Thakur and Mangla, Green energy
2019). These conventional energy sources provide unsustainable solutions to the energy management in
crisis (Carley, 2009). The sustainable economic and social health of the modern world largely
depends on green energy sources (Sahoo, 2016). Thus, it is vital for India to obtain energy
India
security by switching from the non-renewable energy, i.e. coal and crude oil to renewable
energy without affecting the growing economy (Tripathi et al., 2016). According to IEA, India
requires 600–1,200 GW new electricity capacity by 2050 (Khare et al., 2013), necessitating at
least 135 billion US dollars for providing universal electricity access to its every citizen. 1333
India is blessed by nature with various green energy sources such as solar, biomass, wind,
small hydropower and geothermal (Rajanna and Saini, 2016). As mentioned earlier, Indian
green energy sector has made considerable progress during last few years. Generation from
renewable energy rose from just 0.4% in 2002 to 9.24% in 2019 (see Table 4). Of this, most of
the generation (45%) has been produced from wind energy, while the rest is from solar (36%),
biomass (12%), small hydro (6%) and waste to energy (0.2%). Green energy after excluding
large hydro projects accounts for 23.1% i.e. 84,400 MW of the total generation capacity. With
large hydro, this capacity rose up to 1,29,799 MW, which is more than 35.77% of total
generation capacity of 3,62,781 MW (see Table 1). Figure 1 is presenting installed generation
capacity in India.
The new draft of the green energy law has put special efforts to address the institutional
support needed to reach green energy targets (MNRE, 2016). The new draft of the green
energy law has put special efforts to address the institutional support needed to reach green
energy targets (MNRE, 2016). Administrative institutions like Renewable Energy
Corporation of India, the National Renewable Energy Advisory Group and the National
Renewable Energy Committee has been created. Indian government has built up a dedicated
supporting ecosystem which undertakes activities related to testing facilities, resource
assessment and incentives to promote local manufacturing (Schmid, 2012). Mandatory
targets are created to drive the changes in energy mix (Partridge, 2013). The Renewable
purchase Obligation (RPO) for solar energy is planned to be increased further, i.e. from
current 3–8% by 2022 (Moallemi et al., 2014). Furthermore, a new provision called Renewable
Generation Obligation (RGO) has also been proposed (PIB, 2015). It requires power plants
running using conventional energy sources to produce 10% of their generation through green
energy sources like wind, solar or biomass, and bundle it with conventional supply in a single
contract. These regulations have empowered electricity regulators to deal strongly in case of
any non-compliance (Chandel et al., 2016). Table 5 highlights various studies which had
examined current status, potential and existing policies for green energy in India and
globally.

Thermal
Year Hydro Coal Gas Diesel Nuclear RES Total RES share

2001–2002 73,579 370,884 47,099 4,317 19,475 2085 517,439 0.40%

2011–2012 130,511 612,497 93,281 2,649 32,287 51,226 922,451 5.55%
2012–2013 113,720 691,341 66,664 2,449 32,866 57,449 964,489 5.96%
2013–2014 134,847 745,533 44,522 1999 34,228 65,520 1,026,649 6.38%
2014–2015 129,244 835,291 41,075 1,575 36,102 73,563 1,116,850 6.59%
2015–2016 121,377 896,260 47,122 406 37,413 65,781 1,168,359 5.63%
2016–2017 122,378 944,022 49,094 401 37,916 81,548 1,235,358 6.60% Table 4.
2017–2018 126,123 986,591 50,208 348 38,346 101,839 1,303,455 7.81% Renewable share in
2018–2019 134,894 1,022,265 49,834 212 37,813 126,800 1,371,817 9.24% total generation
MEQ S.No Themes Author
31,5
1 Green energy status Pillai and Banerjee (2009);
and potential in Bhattacharya and Jana (2009)
India Kumar et al. (2010); Nisar and
Monroy (2012); Khare et al.
(2013); Kapoor et al. (2014);
1334 Sahoo (2016); Sen et al. (2016);
Moallemi et al. (2017); Dawn
et al. (2019)
2 Green energy policy Singh and Sood (2011); Sharma
in India et al. (2012a, b); Shrimali and
Rohra (2012); Philips and
Newell (2013); Gupta and
Purohit (2013); Mahesh and
Jasmin (2013)
3 Effectiveness of Menz and Vachon (2006); Yin
green energy policy and Powers (2010); Marques
instruments and Fuinhas (2012); Schmid
(2012); Shrimali and Jenner
(2013); Kathuria et al. (2015);
Panse and Kathuria (2016);
Shrimali et al. (2017a, b)
4 Development of Bilgili et al. (2011); Mani and
offshore wind Dhingra (2013); Kota et al.
energy (2015); Tsai et al. (2016);
Nagababu et al. (2017)
5 Public acceptance to Langer et al. (2017); Sokoloski
wind energy et al. (2018); Johansen (2019);
Mueller and Brooks (2020);
Borch et al. (2020)
6 Consumer Wiser et al. (2001); Zarnikau
acceptance for green (2003); Salmela and Varho
energy (2006); Mozumder et al. (2011);
Zori
c and Hrovatin (2012);
Table 5. Thøgersen and Noblet (2012);
Summary of literature Kaenzig et al. (2013); Shi et al.
review organised as (2013) Sangroya and Nayak
per various themes (2017)
Context Inference
India Highlights immense potential of
green energy generally and wind
and solar energy specifically in
India
India Determines barriers to
development of green energy in
India and how policy can be used
a instrument for increasing
green energy installation in
India
Global Empirically analyse role of
various policy instruments in
developing green energy
Global Highlights lack of sustainable
policy for developing offshore
wind energy globally
Global Recognise vital role of social
aspects in implementation of
wine energy projects
Global Examines factors influence
consumers’ acceptance of green
energy as expansion of green
energy rooted in consumers’
demand

3.1 Technological development in renewable energy

In recent years, wind energy sector has endured a major change in India by shifting from tax-
credit driven investment to mainstream Independent Power Producers (IPPs) (Shrimali et al.,
2013). Thereby several large wind farms has been established that uses the state-of-the-art
management practices and technology like larger MW class wind turbines, usage of logistics
tools for wind farm construction and maintenance, inclusive O&M practices for plant life and
seamless grid integration (Urban et al., 2015). Moreover, this industry has gained from
development in wind turbine technology such as improvements in tower structure, drive train
technology and power electronics, which is proving highly cost effective (Shrimali et al.,
2017a, b). The cost of wind turbine has started increasing since late 1990s due to a various
factor including higher material costs and larger turbine dimensions. Nevertheless, with
maturity in design technology and stabilisation in production, costs have started to come
down since 2010 (Kumar et al., 2016). The use of better aerodynamic profile, lightweight
materials like carbon-fibre, segmented blades, variable rotor diameter and on-site
 160 12
Green energy
140 management in
10 India
120
8
100
Hub height (in mtr)
80 6 1335
Rotar Dia (in mtr)
60 WTG Size (in MW)
4
40
2
20 Figure 3.
Growth in wind turbine
0 0 generators
1980-901990-951995-002000-052005-102010-152015-20 Future

manufacturing can reduce costs significantly and also increases the capacity utilisation
factor. It is expected the use of modern technology will increase the energy output with
smaller changes in capital cost in the future (Sen et al., 2016). During last 2 decades, the rotor
diameter and hub height of wind turbines have enlarged four times (as shown in Figure 3),
while the average rating, i.e. size of wind turbines increased almost tenfold (Shrimali et al.,
2017a, b). Both these developments have enhanced the electricity output of the turbines, thus
decreasing the overall cost of energy generation (Sen et al., 2016). Nevertheless, the hub
height, rotor diameter and capacity of wind turbines installed in India is still 20–30% lower
than that of the turbines installed in Europe and US, thus have possibility for further
development.
In solar energy sector, while most of projects in India have used “crystalline silicon”
technology, having PLF (plant load factor) of 16–17% on an average (Jolly and Raven, 2015;
MNRE, 2016), few projects have also used thin-film technology of “cadmium-telluride and
copper-indium-gallium-selenide” (MNRE, 2016). As depicted in Table 6, there is not much
difference in the PLF of these two technologies (C-Si and thin film) for the projects

Batch I phase I Batch II phase I

Crystalline Thin film Crystalline Thin film
For year 2014 technology technology technology technology

January 16.95 14.62 17.55 18.95

February 19.19 16.59 21.56 21.41
March 21.72 18.70 23.51 23.23
April 21.67 18.78 24.54 24.49
May 21.77 18.15 23.38 23.54
June 21.51 17.67 23.06 23.61
July 18.13 14.79 20.49 20.75
August 19.08 15.20 21.36 21.26
September 18.71 16.43 22.29 22.37 Table 6.
October 18.28 16.06 22.00 21.41 Performance of solar
November 18.64 14.47 21.25 20.63 energy projects
December 16.76 13.98 20.02 18.99 installed in India
Average 19.36 16.28 21.75 21.72 (average PLF %)
MEQ commissioned under second batch of Indian “National Solar Mission” but the performance of
31,5 C-Si was evidently better during Batch-1 of this mission (MNRE, 2016). Although the average
PLF of solar energy is relatively less than the wind energy, it is likely that it will rise in near
future due to the ongoing scientific research (Shrimali and Rohra, 2012). Moreover, the PLF of
the solar plants installed in India is higher than the plants installed in Europe for both
technologies (REN 21, 2016). Due to the better capacity factor, LCOE (Levelized cost of
energy) in India is less, and some time matches to the conventional energy sources (Hairat and
1336 Ghosh, 2017, REN 21, 2016).

3.2 Economics of renewable energy

Over a period of time the cost of generating power from conventional energy sources has also
increased due to the rise in the costs of fuel, transportation, maintenance spares and labour
(Joseph, 2010; Mahapatra et al., 2012; Sharma, 2015). This has increased the costs of
contracting new capacity by the distribution utilities because generating companies have
started factoring in fuel supply and construction risks. This increase in electricity
procurement costs is largely borne by large industrial and commercial consumers. In
contrast, with the advancement of technology cost of generating energy from green energy
sources have dropped in real terms over the years and become comparable to coal based
thermal electricity generation units. Due to the improvement in PLF and reduction in module
prices, solar tariffs have reduced to 5 INR per kWh in 2015 from a high of 15 INR per kWh in
2009 (Mint, 2015). In 2015, a solar energy developer bid 5.051 INR per kWh for a 50 MW
project in Madhya Pradesh, while the average tariff for complete 300 MW project was just
5.353 INR per kWh (MPPMCL, 2015). In Telangana, at the time of reverse auction for a
2,000 MW project in August 2015, a developer bid 5.1729 INR per kWh for a project of 50 MW
(Financial Express, 2015). These solar tariffs are expected to come down even further and will
become equivalent to conventional energy in next 2–3 years by reaching to a level of 4.00 INR
per kWh to 4.50 INR per kWh (BS, 2015). These rates are comparable to the large commercial
and industrial energy users pays to utilities, thus motivating them to consider renewable
energy as an option. Many organisations have either set up their own captive generation
facilities in states with renewable energy potential or buying energy from other renewable
energy generators (Jolly and Raven, 2015). This is also beneficial for green energy developers,
since it provides them better tariffs than feed in tariff offered by government and provides
higher returns (Spratt et al., 2014). However, selling green electricity to industries or
commercial units, incur additional costs in the form of imbalance levy, wheeling charges, and,
many times, a cross-subsidy surcharge (Rao and Kishore, 2009). If these costs are removed or
reduced, generators will be able to sell power at mutually agreed prices that offers them a
higher return and to buyer, a lesser tariff (Liming, 2009).

3.3 Business models

Indian energy markets offer several options to green energy developers to use the electricity
generated by them. This allows investors with different risk appetite to enter in the Indian
green energy market. Some of the business models of green energy are discussed as follows:
3.3.1 Feed-in tariff. In this business model, the wind energy generators sign a long-term
power purchase agreement (PPA) at fixed price with state government, delivering them a
stable revenue stream (Gupta and Purohit, 2013). The state electricity regulatory commission
(SERC) in line with CERC and similar industry expectations espouse an approach on a
cost-plus basis for designing tariff for the electric energy from wind. They consider various
factors like capital cost, capacity factor and lending cost under a discounted cash flow model
for determining tariff. These projects can also use tax benefits, i.e. accelerated depreciation,
production incentives, i.e. generation based incentive and income tax exemption (Kar and
Sharma, 2015; Singh and Sood, 2011). The business model followed by solar energy is similar Green energy
to wind energy to some extent. In the case of solar energy power producers enters into PPA management in
with state utilities at fixed price in the same manner as in the case of wind energy, but the
tariffs are determined through auction (Yenneti, 2016).
India
3.3.2 Green energy certificates. The green energy generator can sell its energy component
to state utilities at a pre agreed price (APPC, i.e. Average power purchase cost) or to an
electricity consumer directly and gets renewable energy certificates (RECs). These RECs can 1337
be sold on the power exchanges, i.e. PXIL and IEX within a predetermined limit of
forbearance and floor price (Narula, 2013). In this business model, obligated entities, viz. open
access consumers, state utilities and non-renewable captive generators buys the RECs from
the energy exchange (Chandel et al., 2016). However, in the beginning, regulators could not
strictly enforce the RPO obligations and green energy generators could sell only 43% of non-
solar and 13% of solar RECs. But now the State regulators have started to control the REC
market by stringent enforcement of RPO. For example, in August 2015, Maharashtra
electricity regulators determined that under no mitigating circumstances non-compliance of
RPO will be permitted and directed the state utilities to create a “RPO Regulatory Charges
Fund” through which they will purchase RECs (MERC, 2015). In another case, “the appellate
authority, APTEL”, directed the SERC to rigorously adhere to the RPO regulations (APTEL,
2015). They mentioned that distribution utilities must include procurement of green energy at
the time of calculating their annual revenue requirements. This will enable them in
contracting with renewable energy generators in advance or purchase REC from the power
exchange at a suitable time. They also opined that RPO deficit must not be taken to the future
years if in the current year RECs are available (APTEL, 2015). These regulatory orders put
forward a healthy environment for renewable energy development.
3.3.3 Open access. The green energy generators can also sell their energy output to any
industrial or commercial consumer at a pre agreed price (Kathuria et al., 2015). But in this case,
state regulators usually put heavy taxes to compensate the state distribution companies for
the loss of their prime consumers and using their transmission system (Kathuria et al., 2015).
In some states, the taxes are kept low or waived off to motivate green energy generators. For
renewable energy companies, this business model offers an opportunity to sell energy at a
higher price, and the buyer can gain from mutually agreed prices which are usually less then
state electricity price. Thus, this business model provides a win-win situation for both green
energy generator as well as its buyer.
3.3.4 Group captive and captive. A green energy producing company jointly using the
major portion of the generated energy can be designated as captive or group captive.
However, in case of group captive, the renewable energy generating company should invest
at least 26% equity in the renewable energy project and consume minimum 51% of the
electricity generated from renewable energy project (Chaudhary et al., 2015; Singh and
Sood, 2011).
3.3.5 Parks and sites. A renewable energy company may establish solar or wind parks or
develop sites. In case of park, the renewable energy developer creates infrastructure
including common roads, land, transmission, security, water etc. and in return takes usage
rent fee from users (Purohit et al., 2013). This business model is getting a lot of attraction from
the business community. In India, 25 solar parks with a size of 500–1,000 MW, are planned to
be constructed to help domestic and overseas investors who usually seek already built
infrastructure for setting up their renewable energy projects (Yenneti, 2016). An ultra-mega
solar project with the capacity of 605 MW is commissioned in Charanka, Gujarat (Moallemi
et al., 2017).
MEQ 3.4 Incentives and preferences
31,5 State government provides a wide range of incentives and benefits for investing in renewable
energy projects (Mahesh and Shoba Jasmin, 2013). The most successful tax benefit is the
accelerated depreciation, i.e. 80% per annum on the written down value for wind and solar
projects. This allows organisations with huge profits to save tax liability whilst procuring a
productive asset (Shrimali et al., 2013; Yenneti, 2016). The government is planning to phase
out this incentive in 2017. This is a strong financial incentive and appreciated intensely by the
1338 private companies. Moreover, an energy generation company also enjoy income tax holiday
for ten consecutive years in the initial 15 years of its operation. However, minimum alternate
tax (MAT) will be applicable during this period on book profits (Surana and Anadon, 2015).
In 2009, another incentive called generation-based incentive (GBI) was introduced,
offering wind power producers 0.50 INR for every unit of energy injected to the electricity grid
(Shrimali et al., 2017a, b). This incentive is having the maximum limit of 10 million INR per
MW (Shrimali and Tirumalachetty, 2013). This incentive is available to those companies or
individuals who do not claim AD incentive hence benefiting the IPPs having no taxable
income in the initial years. As a specific policy support, to encourage usage of renewable
energy for captive power plant a special treatment for open access and wheeling is given by
some states to the companies. These companies set off energy consumed by them with the
energy generated from their renewable energy plant through wheeling agreement. A special
scheme called third party sale has also been introduced allowing organisations to buy
renewable energy from the renewable energy generator. The usual costs in this business
model are wheeling, transmission, banking and cross-subsidy charges (Kar and
Sharma, 2015).

3.5 Investments and financing models for production of green energy

In last few years, various financial and strategic investors have entered into Indian market
due to the lucrative market opportunities available in green energy (Kathuria et al., 2015).
Various companies have leveraged financing from overseas to develop their primary
renewable energy portfolio and now considering several alternative models for the renewable
energy assets under operation. Most of the IPPs are active in the secondary market too and
takes benefits from the sale of renewable by various big companies who developed these
earlier for a captive sourcing or tax break but now deciding to concentrate on their principal
commercial activities (BT, 2015). The policies of Indian government are also very supportive
to green energy companies seeking external commercial borrowings, FDI (foreign direct
investment) or funding from development and multilateral bank (Umamaheswaran and
Rajiv, 2015). With the aim to accelerate development in renewable energy, Indian government
has allowed 100 percent FDI in this sector (Kathuria et al., 2015). Due to which, the FDI inflows
in the renewable energy sector has grown multifold in recent years. Among various green
energy technologies, wind has attracted maximum FDI (80%), followed by solar (5%) and
biomass (1.7%) (Kathuria et al., 2015). However, the government’s direct support is largely on
the technology development and assessment through smaller demonstration projects or
archetype technologies (Sharma et al., 2012a, b).
Since, green energy sector is categorised as infrastructure, the dependency on funding
from commercial banks, ECB (external commercial borrowing) and NBFCs (non-banking
financial companies), is higher (Sen et al., 2016). In this scenario the most viable option is long-
term finance on concessional interest rates (Farooquee and Shrimali, 2016). However, except
few specialised financial institution, generally commercial banks are reluctant to finance
renewable energy projects. Their reservation towards renewable energy projects for many
times is due to the overall electricity market and nature of renewable projects itself (Sen et al.,
2016). Some specialised commercial banks and NBFC such as Rural Electrification
Corporation have funded green energy projects on a rate lower than other infrastructure Green energy
projects. Generally, the deficiency of non-recourse funding is the biggest limitation of new management in
companies in the green energy sector (Umamaheswaran and Rajiv, 2015) as banks are largely
concerned about counterparty risk and resource risk. To avoid this, financial institutions
India
prefer balance sheet financing or corporate and promoter guarantees in contrast to project
financing (Shrimali et al., 2017a, b). Moreover, cost of debt for renewable energy projects has
also been push forward, due to the overall higher lending rates in the economy. These high
lending rates generally affect every business activity, but green energy industry more 1339
sensitive to this. However, in this scenario of economic slowdown in infrastructure including
conventional energy projects some commercial banks and financial institution see renewable
as an opportunity to fund big ticket projects (Shrimali et al., 2017a, b).
Apart from domestic institution, foreign currency borrowing is playing a bigger role in
renewable energy sector (Kathuria et al., 2015). In the last few years, Indian government has
eased regulations of borrowing from foreign institution to promote renewable energy
development. The emergence of IPPs as electricity generation unit enabling them to resort to
foreign funding for setting up new projects (Farooquee and Shrimali, 2016). Refinancing of
rupee based domestic debt with foreign currency debt is also preferred by some IPPs
(Shrimali et al., 2017a, b). The “US EXIM” bank has emerged as a major lender for the solar
energy projects in India with total funding of $330 Million (Nelson et al., 2012). It has provided
funds to many projects in National Solar Mission which are using solar module imported from
US suppliers. Foreign borrowing is having the advantage of relatively longer repayment
tenure and lower interest cost in contrast to domestic lending institutions. The average tenure
for renewable energy projects is about 14 years. However, fluctuating exchange rate is the
biggest concern of the borrowers. In recent years, the hedging cost of foreign currency has
significantly increased due to the volatility of the Indian rupee, thus reducing the
attractiveness of international borrowing. The government is examining a new model to
hedge the currency risk of foreign investors of solar energy projects by allowing tariffs
denominated in USD and has created a special reserve pool of 60 billion INR for this scheme.
This will increase the funding from foreign financial institutions.
Green bonds are a new financial instrument that the renewable energy developers are
assuming after recent successful instances of CLP, Yes Bank and Exim Bank (Inderst et al.,
2012). Moreover, in order to broaden the funding sources, Reserve Bank of India (the central
bank) has also allowed Indian firms to issue of rupee denominated bonds in the overseas
financial market. Many operational wind energy projects also used credit enhancement that is
secured refinancing through IIFCL (a Government of India company funds infrastructure
projects) and Asian Development Bank, helping the projects in securing loans for longer
tenure and at lower interest rates.
Viability gap funding (VGF) is another financial model in terms of capital subsidy
providing initial funding and reducing the upfront capital costs. This mechanism launched
by government in 2006 to support infrastructure sector projects through capital subsidies
and incentivise them to establish commercially viability. Similarly, MNRE proposed VGF in a
reverse bidding process to green energy developers. In Batch I, the scheme aims for 750 MW
on-grid solar with VGF in a competitive reverse bidding process for project developers along
with guaranty to buy the generated electricity at a fixed rate.

4. Discussion
Economic growth, energy security and environment protection are critical factors during
development of nations’ energy policy. These factors along with high prices of crude oil
created need for promoting renewable energy all over the world. In fact, this need for
sustainable energy policy has become more important for India, being a fast-growing
MEQ emerging economy. Yet, India is blessed with vast resources of solar, wind and hydropower.
31,5 The potential for these various sources of renewable energy is far greater than the current
installed generation capacity. India’s geographic and climatic conditions provides favourable
environment for large scale solar and wind energy projects. However, realisation of this
potential depends upon sustainable techno–economic conditions and policy support at
central and state government level. Although there has been an encouraging development in
technology and cost reduction in renewable energy systems, still the cost of generating
1340 energy from these sources are quite expensive. For widespread application of these
technologies, more R&D improvements in solar PV and wind technologies are needed to
reduce the cost of ownership. Further, lack of policy framework regarding low cost financing
is also a significant barrier in developing renewable energy. The issues regarding easy access
to capital, timely payment from state distribution companies and payment security
mechanism needs for addressed immediately. Finally, as discussed above renewable energy
provides huge advantage and can contribute significantly in India’s energy mix at least
environmental, economic and social costs provided sustainable policy support from
government. It is expected that the share of renewable energy in the total generation
capacity will increase in future.

5. Conclusion and policy implications

5.1 Future prospects of Indian green energy industry
India presents a profitable, reliable and fast growing market for green energy industry. The
urgency to increase generation capacity for addressing economic and social needs is assisting
this country in restructuring its energy capacity towards renewable more rapidly than other
developed nations (Rohankar et al., 2016). Along with electricity distribution companies,
industrial consumers are also contracting with green power producers to meet their
electricity requirements. While comparing with other countries, India’s per capita electricity
usage is extremely low, and it is one-third of the global average and much lower than other
similar countries (Bhide and Monroy, 2011). But in the last decade, i.e. between 2005 and 2015,
this growth picked up and increased to 1,010 kWh from mere 612 kWh (a growth of 5.1% per
annum) (Moallemi et al., 2014). Presently, 24*7 power supply and rural electrification is a main
concern for the Indian government. Based on available statistics a huge population, i.e. 300
million has no access to electricity (Moallemi et al., 2017). Till 2015, 19,706 villages of India
were having no access to the electricity. In most of the Indian states, power supply especially
in rural areas is intermittent and of poor quality. This provides opportunity for the huge new
generation capacity which needs to be constructed, and given the environmental concerns
and affordability of urban middle and higher income consumers, renewable energy option
with small price premium seems very much relevant. During past few year urbanisation has
also increased swiftly and India (Moallemi et al., 2014), which is comparatively less urbanised
with only 31% urban population, is following the path of other countries such as Brazil (87%
urbanised) and China (50%). Generally, urban areas are key consumer segments as these are
more energy intensive and have huge demand. In addition to this, Indian green energy
industry presents opportunities at various levels which are discussed below.
5.1.1 Policy support. Energy security is one of biggest policy issue for a developing country
like India. Import of primary fuels is one largest import for this country and accounts for 37–
40% (2013–2015) of total imports. Recently, soaring commodity prices have fuelled inflation
which resulting in budgetary deficits and constrained supplies. Moreover, climate change has
also become a key consideration in a scenario when over 80% of electricity is generated by
coal (Thapar et al., 2016). The government’s initiative to build an installed capacity of 175 GW
green energy by 2022 will aid in attaining energy security and improving energy mix
(Moallemi et al., 2014). The current policy of using RGO and RPO targets for developing green
energy is viewed as constructive step to increase green energy installed capacity. The Indian Green energy
government has also started a new and healthy energy procurement model, i.e. reverse management in
auctions to facilitate a transparent, quick and well synchronised tender process for solar
energy development.
India
5.1.2 Public support and local development. In India, public opinion for green energy has
relatively been positive and this has facilitated states in maintaining a stable and positive
policy environment over the years. Various state government distribution companies have
entered into agreement with green energy generator to procure green energy. On similar lines, 1341
several private organisations are developing green energy projects for their captive
consumption or made commitments to procure major share of their electricity requirement (in
some cases even 100%) from green energy. Indian government has asked various state
organisations while developing 10 GW solar energy projects. Both government and Indian
judiciary have positive views towards renewable energy. “The Supreme Court of India”
recently in May 2015 made a strong ruling in favour of RPO and mentioned that these
obligations are in the interest of nation and can be made obligatory for open access
consumers and captive users.
Green energy projects are often constructed in remote areas and sometimes in arid lands.
At these places unemployment was very vital issue and with green energy projects although
in limited numbers this problem has been solved, thus improving economic and social
condition of the region. Decentralised energy solutions such as solar-powered agriculture
pump sets and roof-top solar power plant has potential to provide electricity at the bottom of
pyramid, and potentially with policy of net metering creates a sustainable source of income.
5.1.3 Green energy economics and profitability. As mentioned earlier, nowadays generating
green energy is increasingly becoming competitive with electricity from conventional energy
sources like coal and natural gas. Various factors at global level (e.g. solar PV module prices,
technology and optimisation) and at local level (energy of new global player, financial
engineering, competition and captive users) have contributed to the growth of this green
energy industry.
In India the market competition is a strong force. This country is having about 20 wind
turbine manufacturers including large global players having production capacity of
11,000 MW annually. While most of these (ReGen Powertech, Siemens Gamesa, Suzlon, Inox
Wind and Wind World) offers a comprehensive turnkey solution, others (Vestas and GE)
supply the products, i.e. wind turbine. Managing the supply chain is vital (Mangla, 2019;
Uniyal et al., 2019). In case of solar energy, the supply of main component, i.e. solar PV
modules is largely depended on imports. But the inverters and balance of plant can be sourced
inside the country itself. In India, the market of solar EPC is highly competitive and thus
offers aggressive pricing and complete turnkey solutions to solar energy developers.
In most of the states, electricity regulators at the time of determining tariff for relevant
green energy technologies such as biomass, wind or small hydro consider post-tax return of
14–16% for the green power producers. However, as in the case of solar auctions are held, it is
the responsibility of the renewable energy developer to make decision regarding on return on
project, return on equity and strategy of winning bids.
5.1.4 Resource base. As mentioned above, a number of studies conducted by researchers
noted India’s green energy potential way higher than the initial official estimates (Sahu et al.,
2013). A study conducted by Berkeley lab calculates wind energy potential of India in the
range of 2,006 GW to 3,121 GW (for different hub height), much higher than the initial official
estimation of 48.5 GW. Recently, Indian government has revised the wind energy potential
to 102 GW.
Moreover, various state regulators have also changed their tariff determination strategy
and now offering differentiated FIT according to the wind zones. This motivates developer in
constructing projects at the low wind sites. During last few years, the government has also
MEQ started exploring options to incentivise repowering of the old wind turbines whose project life
31,5 have been completed. All these steps increase the green energy market potential in India.
Likewise, “National Institute of Solar Energy” estimates India’s total potential for solar
energy at 749 GW spreading across a number of states, such as Rajasthan, Maharashtra,
Andhra Pradesh, Jammu and Kashmir, Gujarat and Madhya Pradesh.
Development of offshore wind energy projects is another area which can be explored but
at present at nascent stage. It is novel in other countries as well since globally offshore wind
1342 installation is just 8.7 GW, but it is expected to grow faster and as per one estimate it can reach
180 GW by 2035. India is well poised to leverage its extensive 7,600 km coastline for
developing offshore wind energy projects, but at present only southern tip from
Kanyakumari to Rameshwaram in Tamil Nadu and western coast of Gujarat are getting
explored (Chandel et al., 2016). Recently Indian government has announced its “National
Offshore Wind Energy Policy” entrusting NIWE and MNRE to explore the offshore wind
energy projects. A 100 MW offshore project is to be constructed by selected public sector
companies on pilot basis. Not only public sector private players such as Areva, GE and
Siemens have also shown keen interest in exploring offshore wind energy opportunities.
Suzlon has also announced plans to develop a 300 MW offshore wind project at the coastlines
of Gujarat. However, a considerable preparatory work like studying seismic condition, sea
bed, wind patterns, logistics support, and maritime activities needs to be done.
5.1.5 Business models. As mentioned above, India’s electricity market offers wide range of
options like RECs, feed-in tariffs, open access sales and captive consumption to green power
producers. This means various types of investors can be targeted who can structure their
business profile according to their risk appetite.
The policy environment for open access is relatively pro-renewable and offers a strong
cost advantage to the renewable energy generators and consumers. The revised guidelines
for grid tie-ups like scheduling and forecasting of energy generation offer a realistic and clear
roadmap for the growth of green energy.
5.1.6 Industry response. The market outreach programme of Indian government like the
first “Renewable Energy Global Investors Meet and Expo (RE Invest 2015)” has got wide
attention from the industry. Several private investors from India showed interest in
developing 190 GW of green energy projects, while the overseas investors expressed
commitments to set-up 58 GW. State-owned entities assured to develop 18 GW. Whereas, on
the manufacturing front, 41 GW of green energy equipment manufacturing facilities have
been planned. Various financial institutions and banks articulated intentions to provide
funding to 72 GW green energy projects. The government has now opened consultations with
private sector and various state agencies to help in converting these commitments into active
investments. These developments promise a profitable and best phase to enter in India’s
green energy sector.
Our review of green energy management attests successful green energy mix in India will
require emphasis on two major areas—addressing the generation side of green energy and
solving the financial and economic barriers of green energy. In addition, the review highlights
the critical role of technological innovation in the successful implementation of green energy
management strategies. Moreover, structure and regulations of the Indian energy sector also
raise significant concerns, although most of states have developed level policies to support
renewable energy. However, renewable energy is a very small part of electricity sector, which
itself in a very bad shape. Financial failure of the state electricity boards raises project risk
and work as barrier in renewable energy development.
Another important area of green energy management is raising demand for this
sustainable source of energy. Green energy can also be promoted through awareness
programmes. These campaigns may educate potential developers about the benefits of
renewable energy and to convince consumers about the cost effectiveness and reliability of
green energy technologies. Based on the discussion above, current study clearly suggests Green energy
shifting attention towards more dissemination and commercialisation of renewable energy management in
technologies by involving all stakeholders including private sector, developers, electricity
boards and consumers.
India

5.2 Implications
The findings of current study will help policy makers in better management of green energy 1343
in India. Financing and technological development are important aspect of green energy
management and this provides opportunity for policy makers to improve in these areas. The
strategic results will be easily achieved by improving economic viability. This study provides
good review of ground reality of green energy management and suggests that this
performance of this sector will surely improve environmental, economic, social and operation
performance of Indian electricity sector. This study provides several valuable guidelines to
policy makers to achieve their targets in both immediate future and long term by addressing
barriers and improving facilitators of green energy management. In below section, some of
future avenues of research are provided.

5.3 Directions for future research

The Indian renewable energy sector is continuously evolving, learning and changing itself to
according to global and local market conditions. Although developing a sustainable
ecosystem for renewable energy may take time but Indian government can take immediate
steps such as easy financing, payment security mechanism etc. to provide boost to this sector.
Considering this, future research can focus on relationship between renewable energy and
financial sector. Many times, renewable energy investor considers several non-economic
issues for renewable investing. An empirical study in this area can improve the
understanding of behavioural dynamics of renewable energy investor. Future studies
focussing on examining the design of economic incentives like feed in tariff, GBI etc. and
determining the characteristics of a best economic incentive will contribute to the renewable
energy literature.

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Further reading
Jolly, S. and Raven, R.P.J.M. (2016), “Field configuring events shaping sustainability transitions? The
case of solar PV in India”, Technological Forecasting and Social Change, Vol. 103, pp. 324-333.
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implications to Pacific Island countries”, Management of Environmental Quality: An
International Journal, Vol. 23 No. 3, pp. 264-274.
About the authors Green energy
Deepak Sangroya is an Assistant Professor of Marketing at Jindal Global Business School, O.P. Jindal
Global University. He has a rich blend of work experience from both academics as well as industry. management in
Deepak earned his Ph.D. from Department of Management Studies, Indian Institute of Technology India
Roorkee (IIT Roorkee) and has completed Master of Business Administration from National Institute of
Technology, Kurukshetra. His research interest includes B2B marketing, green marketing, corporate
environmental initiative and B2B branding. He has contributed many research articles in reputed
journals such as Journal of Cleaner Production, Organization and Environment, International Journal of 1349
Non-profit and Voluntary Sector Marketing etc. by leading publishers that include Elsevier, Springer
and Sage. Deepak Sangroya is the corresponding author and can be contacted at: sangroyadeepak@
gmail.com
Gaurav Kabra is working as Assistant Professor at National Institute of Industrial Engineering
Mumbai, Maharashtra. He has a doctorate degree from Department of Management studies, Indian
Institute of Technology Roorkee. His research interests lie in the area of operations management, supply
chain management, humanitarian logistics, Application of IT in Business. Articles authored by him have
been published in reputed international journals, such as Telematics and Informatics, International
Journal of Disaster Risk Reduction, European Journal of Scientific Research, Benchmarking: An
International Journal etc. He is also the recipient of Emerald Literati Award of Excellence 2016.
Yatish Joshi is an Assistant Professor at Motilal Nehru National Institute of Technology, Allahabad,
India. He holds a Doctorate Degree in Marketing from Indian Institute of Technology Roorkee, India. His
research interests lie in the area of green consumption, sustainable behaviour and customer experience.
Articles authored by him have been published in reputed international journals, such as Ecological
Economics, Management of Environmental Quality, International Journal of Non-profit and Voluntary
Sector Marketing, Sustainable Production and Consumption etc. He is also the recipient of Emerald
Literati Award of Excellence 2017.
Mohit Yadav is an Assistant Professor in the area of Human Resource Management at Jindal Global
Business School (JGBS). He holds a Ph.D. from Department of Management Studies, Indian Institute of
Technology Roorkee (IIT Roorkee) He has published various research papers and book chapters with
reputed publishers like Springer, Sage, Emerald, Elsevier, Inderscience etc. and presented research
papers in national and International conferences both in India and abroad. He has many best paper
awards on his credit too. He is a reviewer of various international journals like Computers in Human
Behavior, Policing etc. His areas of interest are Organizational Behavior, HRM, Recruitment and
Selection, Organizational Citizenship Behavior and Quality of work life and role.

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