Industry Speak : “Investing in RE can revive economy”

Industry leaders are buoyant about the future of India’s solar power sector despite the recent slowdown due to the sluggish economy and delay in allocation of project under Phase-II of the Jawaharlal Nehru National Solar Mission (JNNSM). Ratul Puri, Chairman of Hindustan Power Projects Ltd, speaks to Richa Kapoor about the prevailing energy scenario and the role solar energy and other forms of renewable energy will play in providing complete electrification by the end of the 12th plan

Q: The total solar energy potential in India is huge and this may contribute significantly to bridging the gap between supply and demand. Do you think that the efforts taken in harnessing that potential are in the right direction?

A: India is endowed with huge solar potential, with most parts of the country receiving energy in range of 4 – 7 kWh/ sq m / day. It is worth-while noting that our country has more than 300 sunny days and also that the Solar irradiance is approximately 160per cent higher than that of Italy/ Japan. The above translates to annual Solar energy incident on India as 5000 trillion kWh !! Considering the fact that power deficit in country from April 2013 – February 2014 was only 39,335 million kWh, hence it is evident that the solar truly has huge potential to bridge this deficit.

The efforts taken to harness the potential are in the right direction but the intensity of efforts have to be multiplied many times, especially with regard to strict enforcement of renewable purchase obligation (RPO); strengthening of renewable energy certificate (REC) framework by putting in place Guarantee fund using National Clean Energy Fund(NCEF) and government backed power purchase agreements (PPAs) similar to NTPC – Plan fund diversion. There is also a need to arrange for land bank and undertake regular revision of Discom tariffs on annual basis to reflect the true cost of power supply. The transmission grid and local distribution grid have to be strengthened in order to evacuate power generated at the solar energy sites.

Q: Solar projects under Batch I, Phase II of Jawaharlal Nehru National Solar Mission (JNNSM ) have been allotted to project developers, however, it got delayed by almost a year. Do you think that the targets of the second phase will be achieved on time?

A: The cumulative JNNSM Phase II (2013-17) target for Utility Grid Power projects (including roof-top) is 10 GW, out of which target of Central Sector of 1650 MW was planned to be allotted in 2013-14 and 1950 MW in 2014-15. We are very positive that there will be no further delay and JNNSM targets of phase II will be met.

Q: What strategy will india need to adopt to provide the much needed boost to the solar sector in wake of economic slowdown?

A: Except for land and balance of system (BOS), generally the costs of solar module, inverters, etc. have shown a downward trend. In this economic downturn one should promote investments in renewable energy projects. Th ough these demand high initial investments, they have almost zero recurring expenditure on fuel in the years to come. Similar to USA, wherein in post 2008 era, they made huge investments in building solar and wind assets, which not only brought back the momentum in USA economy but also created jobs in manufacturing, this without creating any long term recurring burden of fossil fuel costs, India should also push investments in Renewable Energy.

In order to further increase the solar installed capacity Government needs to focus on reducing the cost of borrowing for the project. National Clean Energy Fund(NCEF) is a good way to tax polluting industry and use that pool for investing in renewable assets. Also special exposure should be maintained with banks to provide funds to solar sector. Similar to fi nancial institutions like Green Banks in countries like U.K. and U.S.A, there should be a separate framework for funding solar projects. Since the power generation company has a 10 year tax exemption from the block of 15 years, the Government should make relevant amendments in MAT credit so as to give the company true advantage of tax benefit and increase it to 15 years.

Q: What do you think about the 20,000 mW grid-connected solar power target set under Jnnsm? Will india be able to achieve that target?

A: Definitely, India should be able to achieve the numbers well beyond the targets. Globally the Solar capacity added last year (2013) was approx. 37 GW, reflecting one of the key strengths of Solar which is scale and speed. In this capacity addition of 37 GW, there was dominance of China (12 GW); US (5 GW) and Japan (7 GW). Seeing the capacity addition achieved, we believe that India can also achieve its annual JNNSM target of approx. 2000-2500 MW with adequate policy support and planned execution.

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