Solar photovoltaic rooftops have emerged as potential green technologies to address climate change issues by reducing dependence on conventional fossil fuel-based energy. With a strong commitment to increasing renewable energy-based capacity to 175 GW by 2022, India’s goal is to install 100 GW of solar energy capacity.
The current Indian objectives, issues & challenges in achieving them and trends in further developments are discussed. The centre can help accelerate the growth of the industry in 2021 and beyond by incorporating positive regulatory, fiscal, tax, and financing policies and incentives for the renewable energy industry.
The Government of India has set an ambitious target of installing 175 GW of renewable energy capacity by 2022, which has been increased to 450 GW by 2030, as committed by the Prime Minister at the United Nations Climate Action Summit. It is a marathon target and the total investment required to meet the initial target of 175 GW has been estimated at just over $150-200 billion.
The performance of the industry was adversely affected by COVID-19 and related issues in 2020. The current level of installed renewable capacity in the country is only about 90 GW and there is a pipeline of more than 50 GW for implementation.
The industry is struggling with the lack of a clear regulatory framework in the sector at both central and state level, rapidly declining tariffs, and the lack of long-term competitive financing options with high and ambiguous tax structures.
The poor financial health of the Discoms, which are the main buyers of this power, has further reduced the attractiveness of the industry in the eyes of international and domestic investors and lenders due to their poor track record of payments and frequent changes in state-level policies, particularly in relation to the rooftop and open access projects.
Under the regulation, the government must ensure that a stable policy framework on renewables is clearly announced and followed at both central and state level. This includes the implementation of amendments to the Electricity Act of 2003, privatisation of T&D systems and continued higher allocations of funds for T&D to upgrade the interstate and intrastate power transmission networks for the evacuation of power.
There must be opportunities on the Industrial & Commercial rooftop and open access projects. The center should properly amend and relax net metering policies by completely withdrawing the restrictions on net metering. These should apply in particular to the current Ministry of Power Regulations for Consumer Electricity (Rights of Consumers) 2020, which mentions the withdrawal of Net Metering over 10 KW of load for any consumer.
The proposed rule, if implemented without any amendment, will be a hindrance in the solar roofing industry. With regard to open access projects, the government to plan to phase out and remove cross-subsidy charges, transmission surcharges and other applicable charges immediately and provide a single window system for the timely approval of such projects. Open Interstate Access for RE projects should be opened.
India, which is one of the lowest cost producers of electricity, can become a hub for achieving sustainability targets for global companies through virtual PPAs and commercial power plants, but current market regulations prohibit such arrangements as ‘derivatives.’
If Virtual PPAs shall be considered and allowed by CERC as they are purely bilateral in nature and should not be regarded as a derivative contract. This can help India to become one of the largest corporate PPA markets in the world, attracting huge investment in RE generation and helping businesses meet their RE goals of buying green power directly from RE generators, which are currently being restricted by the regulations. The Government should aggressively promote renewable-solar integrated battery energy storage systems (BESS) by providing the required regulatory and fiscal incentives to this segment as such systems help to store and stabilize infirm RE power for use during peak power times by consumers, reducing their power costs during that time. They can also help curtailment of renewable energy and in growth of micro grid or off-grid projects. These measures should include making BESS mandatory with infirm power, the end-use-linked exemption from customs duty on imports of lithium-ion batteries, making storage purchase obligations (SPOs) mandatory for DISCOMs and corporate consumers on RPO lines, provide capital subsidy for small rooftop and micro grid or off-grid projects using BESS and categorizing them as part of the priority lending sector to help them raise easy long-term funds at very competitive rates.
While the government funding project should create a separate category under the “Renewable Energy” category of priority sector lending. More lenders like DFI’s, PSU’s and private sector banks and NBFC’s-should be encouraged and directed to set separate limits for financing RE projects in India at competitive rates. This will ensure adequate availability of long-term funds to the industry for such projects at a reasonable rate.
The renewable energy industry is eagerly awaiting favourable consideration of the above-mentioned proposals and a host of other related changes proposed by the industry to the government through various industry platforms and related channels. We strongly urge the regulatory and administrative authorities to give a patient hearing of the above suggestions and to implement them in the content and spirit of a self-reliant India. This, in turn, will help the RE industry to provide the masses and industry with affordable, high-quality green powers and contribute to the rapid growth of the country’s economy in the coming years.