Clean energy has been a hot topic for some time now with the Government’s aim to make India one of the world’s largest installations of clean energy. Renewable energy growing at a CAGR of 15%, is currently at a faster rate than coal power plants. The Indian Government predicts 57% of the country’s electricity capacity will come from non-conventional fuel sources by 2027. This prediction exceeds the renewable energy target of 40% by 2030 agreed at the Paris Climate Change conference last year. What are the recent developments that promote clean energy?
According to Government data, a cumulative renewable capacity of 50 GW has been installed nationwide as of December 31, 2016 – contributing over 15% of the installed electricity production capacity in the country. The Ministry of New and Renewable Energy predicts $14.85 billion investment for the renewable energy sector and is aiming at 20,450 MW of power generation from non-conventional sources in 2017-18 – 15,000 MW from solar; 4,600 MW from wind; 750 MW from biomass and 100 MW from small hydro power.
The Framework Agreement of International Solar Alliance (ISA) has been signed by 24 countries after it was opened for signature on November 15, 2016. ISA is a platform for cooperation among solar resource rich countries to collaborate on addressing the identified gaps through a common and agreed approach to increase utilizing of solar energy and meet energy needs of ISA member countries in a safe, convenient, affordable, equitable and sustainable manner. It will be a major international body headquartered in India. The alliance is expected to achieve the objective of the Paris Agreement which emphasizes on moving towards renewable energy.
The US-India Clean Energy Finance (USICEF) Initiative was launched in December 2016. This $20 million financing facility will help in unlocking Overseas Private Investment Corp (OPIC) finance and mobilize public and private capital to support Indian-distributed clean energy projects. Through this initiative, project developers pursuing mini-grid, distributed rooftop and off-grid solar projects, smaller-scale grid connected solar projects would be benefitted and will help contribute to India’s renewable energy and energy access goals.
Minister for New and Renewable Energy Piyush Goyal said a scheme to promote domestic manufacturing of solar panels may be announced in 2017. The $3.12 billion module aims to create 5 GW of photovoltaic manufacturing capacity by 2019 and 20 GW by 2026. After successful reduction in solar tariff to a record low of about $0.044 per unit through transparent auction of sites, the Government will focus to make wind power affordable and make it a viable source of electricity. India is currently ranked fourth globally in installed wind power capacity after China, US and Germany.
The Solar Energy Corporation of India (SECI), earlier had released a tender for rooftop solar capacity of 500 MW capacity targeting buildings in the residential, institutional and social sectors and has recently launched the largest tender of 1,000 MW rooftop solar capacity targeting central government ministries and departments. Capital subsidies of up to 35-90% are available under this tender and it is expected to reduce the tariffs further. India’s first 1,000 MW wind power tender offered by SECI last year may potentially bring down wind energy tariffs too. The objective is to facilitate supply of wind power to non-windy states at a price feasible through transparent bidding.
The Union Budget, released on 1st February 2017, reassures the Government’s focus on renewable energy. The budget allocated around $498.6 million to solar energy, $60.5 million for wind, 20 million for small hydro and $11 million for bio-power. India has a total of 9 GW solar capacity as on December 2016. Finance Minister Arun Jaitley, in his budget speech announced the plan to add 20,000 MW renewable energy capacity through the second phase of solar park development. Further, 7000 railway stations would be fed through solar power in the medium term and work has already begun in 300 stations. India is also considering expanding wind energy to 20,000 MW, along with expanding the scope of nuclear and hydro power projects.
The much awaited goods and services tax (GST) regime is set to be implemented from 1st July 2017. GST in its current form would increase the renewable energy generation costs by 10-12%. Thus, the Union Power Ministry has urged the GST Council to either consider renewable power as a deemed export or merely assign a zero GST rate on clean energy. This will allow power producers to get refund of the taxes paid on raw materials and services.
It is evident that India is in the right direction with two major clean energy projects in the country. First being the world’s first large-scale unsubsidized CO2 conversion unit that converts CO2 emissions from coal-powered plant into baking soda – reducing up to 60,000 tons of CO2 atmospheric emissions every year. Second being the world’s largest single-location solar power plant with 648 megawatts (MW). Both these projects are located in the state of Tamil Nadu. A Green Energy Corridor worth $5.64 billion is also being set up to ensure evacuation of renewable energy. With 100% FDI allowed under automatic route for projects of renewable power generation and distribution, an FDI of around $1.77 billion was received in the renewable energy sector from April 2014 to September 2016. Opportunities in the sector are many and everyone is in a bid for a share in India’s fast expanding renewable sector.
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