Whereas we proceed to spend money on new renewable vitality capability, we additionally have to strengthen our distribution infrastructure
Photo voltaic panel. Picture courtesy ChristofferRiemer/Wikimedia Commons
By renewing our dedication to breach the 2022 renewable goal, we are able to additionally pave the way in which for a clear restoration from the pandemic and obtain extra.
In 2020, the renewable vitality sector was a witness to 2 essential developments. Whereas the unit worth (via reverse auctioning) hit a brand new report low of Rs 1.99, India put in only one.73 GW of latest photo voltaic capability over 9 months to September 2020 or round 68 p.c lower than the 5.84 GW put in in the identical interval in 2019.
The financial forecast offered by the Nationwide Statistical Workplace (NSO) in early January additionally mentioned that solely two sectors will finish the fiscal (2020-21) with a constructive progress–agriculture and energy. That is regardless of the actual fact the NSO expects the economic system to have contracted by 7.7 p.c, one of many unlucky outcomes of the COVID-19
pandemic. This clearly underlines the worth of the ability sector to the economic system together with its innate resilience and skill to ship in opposition to all odds. The challenges confronted by the sector throughout the pandemic and the way it overcame it are already well-known now.
Over the previous decade, the renewable vitality sector in India has quadrupled by way of producing capability. As we speak, globally, we take pleasure in one of many lowest costs for renewable vitality. This has additionally helped us to develop into one of many main economies on this planet that’s properly on its solution to attaining local weather change targets agreed within the Paris Accord.
The 175 GW renewable vitality goal set for 2022 is a vital a part of not solely our local weather change targets however may even play a significant function in serving to obtain the GDP goal of $5 trillion by 2025. To be able to obtain this goal over the following two years (from round 90 GW now), now we have a variety of catching as much as do.
Our quick problem is to create a extra conducive inexperienced vitality ecosystem backed by a sturdy manufacturing ecosystem to make it cost-competitive. As we speak, greater than half of the parts that go right into a typical photo voltaic venture in India come from China. Rising tariff and non-tariff limitations corresponding to import duties can’t be a long-term technique in a world fast-spinning in the direction of globalisation. Our long-term technique should be to begin constructing a large capability enhance within the parts provider ecosystem which may occur provided that there’s a robust monetary help system.
What we’d like is a better incentivisation of native manufacturing. These might be within the type of direct incentives to producers corresponding to curiosity subvention on the time period mortgage and dealing capital mortgage, decrease energy price and export incentives from 2 p.c to eight p.c beneath Remission of Duties or Taxes on Export Product.
There’s loads of scope to additionally broaden using renewable vitality via demand-side administration. For instance, the preliminary price of putting in photo voltaic rooftop (regardless of the plain long-term monetary advantages) continues to be a deterrent for wider adoption of renewable vitality throughout all consumer teams i.e., industrial, business and home. Focused monetary incentives corresponding to extra reasonably priced capital price will present the much-needed large push on this route.
Whereas we proceed to spend money on new renewable vitality capability, we additionally have to strengthen our distribution infrastructure. The distribution corporations or DISCOMs throughout the Indian energy sector proceed to be the weakest hyperlink that must be addressed extra significantly. Impartial estimates launched in mid-2020 have recommended that DISCOM money owed (owed to producing corporations) may hit pre-COVID ranges.
The liquidity reduction scheme introduced in Might 2020 to assist state DISCOMs via state authorities assure backed loans stay a short-term measure and this has been solely partially applied. There’s a robust case to be made for increased budgetary allocation in the direction of strengthening of the distribution infrastructure, which is able to assist DISCOMs to enhance their operational efficiencies.
The upcoming Union Price range is an effective alternative for the federal government to handle a few of these points. There’s little doubt that the federal government is dedicated to the bigger nationally decided environmental targets and renewable vitality is the neatest solution to get there. For the long-term gamers, that is additionally a historic alternative to learn from the worldwide shift in favour of inexperienced vitality (and away from fossil gas). What we do over the following few years will decide if India shall be a serious a part of this world change and in addition emerge as Atmanirbhar Bharat.
The author is the CEO and MD, Tata Energy
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