2016-02-02 / Regulatory & Industry Trends
Renewable energy – time to move from commitment to action
Economic growth and development are hugely dependent on the power sector, especially so for developing nations. The Indian power sector is transforming rapidly and is therefore altering the industry outlook, however, as a country we still have a long way to go to provide energy security to all our citizens. Renewable energy is non-negotiable for India and the government’s commitment to accelerate the growth of this sector is evident. But it will need to be a fine balancing act – as we need to develop enough to provide affordable energy to all our citizens.
In the backdrop of the Paris agreement, this commitment also brings with it a responsibility towards balancing growth and its implications on climate change as India now assumes a significant leadership role in managing international climate treaties. If the Paris Agreement brings forth ‘innovation’ and ‘commitments’, the time is now ripe to focus rigorously on the ‘deployment’ aspect in order to address the transition towards a low carbon future. It is also important that industry and corporate sector does their bit to enhance usage of renewables in their energy portfolio.
Government policies support growth
Deployment is primarily execution and implementation where government policies play an important role. This time around, the government is proactively taking steps to promote the judicious use of clean capacities at the ground level across spectrum of people. The recent approval of INR 50 billion to fund 30% capital subsidy for rooftop solar installations is a clear indication of the government’s intentions. The disbursement mechanism through Solar Energy Corporation of India (SECI), schemes run by state governments and subsidy disbursements through financial institutions will ensure that the benefits reaches the right target audience. Keeping commercial and industrial establishments out of the framework is particularly beneficial to the retail category.
Revival of distribution companies is imperative as the long term prospects of renewables are heavily dependent on their financial health. Traditionally discoms have been burdened with huge annual debt and the cumulative losses have impacted the offtake of power as cash strapped Discoms prefer “Power cuts to providing power”. The Ujwal Discom Assurance Yojna or UDAY attempts to address this issue to a great extent to ease the financial crunch faced by power distribution companies. Under this scheme, the state has the flexibility to take over the discom debt through loan, equity or grant on state balance sheets and thereby making states answerable and committed towards monitoring the health and performance of discoms in future to avoid another debt trap.
Need to augment T&D system
The Indian power sector in last 10 years has largely focused on augmenting generation capacities resulting in under investments in Transmission and Distribution (T&D). A major challenge is to move renewable power from generation sites to consumption sites, largely attributable to inadequacy of grids. The amount of electricity lost during transmission is still relatively high and needs concrete measures to arrest that. In order to improve the country’s power supply conditions, an investment of INR 3 lakh crore is expected over the next four years. This will helps strengthen the grid infrastructure at various time horizons and enlarge its outreach. Studies have proven that a 5 per cent saving in transmission losses translates into an additional 15,000 MW of power without any fresh investment.
India is progressing well along its ambitious renewable energy transmission network program” The Green Corridor”. Power Grid Corporation of India has operationalized the second phase of the green corridor program, and has allocated a transmission project in Andhra Pradesh, while completing the tendering process for projects in Madhya Pradesh and Karnataka.
Due to insufficient last mile connectivity a huge chunk of population has been left away from the grid so far. Mini-grid has been an innovative solution for these areas.
Encouraging minigrids / microgrids with solar integration could result in a remarkable shift in the mechanism to deliver uninterrupted access to unelectrified households in rural areas.
Clearly, there are several visible improvements on the regulatory side spawning positive development for the sector as a whole. A more collaborative approach of private players and regulators could provide further impetus to achieve the committed targets in a sustainable manner.
Contributed by Sunil Jain, CEO & ED, Hero Future Energies
This article was originally published at ETEnergyworld.com.