A must-surge year for climate goals

Cometh the hour, cometh the sector. The year 2022 will be critical for India’s renewable energy industry if it is to hit the country’s ambitious 2030 and 2070 climate goals. If we don’t ramp up the tempo in 2022, it will make the targets more difficult to reach in each succeeding year.

The goal of 450 GW of installed renewable energy capacity by 2030, a part of the key target of reaching 500 GW installed electricity capacity from non-fossil fuel sources—rightly set by Prime Minister Narendra Modi at COP26 — is challenging.

India has just crossed 100 GW of renewable capacity, leaving us around 350 GW to install to hit 450 GW (excluding nuclear and hydro). This means adding 30-40 GW installed capacity annually for nine years straight.Obvious, yes. Easy? No. For example, in 2021, India added 14 GW through solar and wind capacity, of which ReNew contributed 1.72 GW. 

Stage is set

However, there is room for optimism as the base prepared in the preceding years gives us a good shot in 2022 and beyond at hitting our climate goals.  Here’s why:

Enabling policy environment: The Centre has been very proactive in helping the renewable energy (RE) industry scale in recent years. For instance, it allowed foreign direct investment up to 100 per cent in renewables via the automatic route and, more recently, announced a productivity-linked scheme to boost manufacturing in the sector. Overall, the focus on public private partnerships and a conducive policy-making environment have created a strong base for RE that can be ramped up. 

Friendly finance: With climate change becoming a huge focus internationally among political and business circles, as well as concerned citizens, climate finance has attracted very serious funding. By the end of COP26 last November, 450 financial firms representing almost $130 trillion have vowed to put green investments at the heart of finance, which will go a long way in funding the transition to net-zero.  

Renewable rush: Another factor enabling the renewable sector to grow fast is the sharp increase in the number of participants, attracted by a generally enabling policy environment and massive scope for long-term growth. 

Clearly, the runaway is mostly ready for the renewable sector to take off in 2022. A few key measures will certainly help:

SECI and a demand boost

The role of the Solar Energy Corporation of India (SECI) has been laudable in India’s renewable journey. Given that the country would need to conduct 20-30 auctions for a total of 30-40 GW a year, it would be important to expand and strengthen SECI in 2022 to ensure enhanced auction activity. For this we need more electricity demand. In this context, both the government and industry can take measures to boost demand, which, in turn, will lead to expansion of renewable capacity, accelerating the journey to our climate goals. The increased requirement can then be harnessed by SECI to undertake more auctions. In 2021, SECI conducted auctions of total 6.7 GW. 

Ease taxes

India’s renewable push over the next few years will require strong local manufacturing to de-risk supply chains, especially amid Covid-linked economic uncertainty. It is essential that taxes and duties on RE equipment such as turbines, modules, and electrolysers (including for battery storage) are lowered and rationalised. For instance, the goods and services tax (GST) on renewable equipment should be capped at a maximum of 5 per cent for viability of manufacturing, and electricity should be included under GST to reduce prices for end consumers. 

No kill Bill

The Electricity Amendment Bill, 2021, needs to be urgently passed and implemented effectively, putting the 4 Cs —customer, competition, compliance, and climate—at the centre of the sector. Passing the Bill will allow the delicensing of distribution that will let private firms enter distribution and compete with discoms, giving more choice to consumers via lower tariffs and better service. This will attract fresh capital and new technologies, resulting in lesser losses for the sector overall.

‘G’ is for hydrogen

India needs to double down on green hydrogen to help meet its climate goals, especially in addressing the emissions coming from hard-to-abate sectors such as chemicals, industrial, fertiliser and heavy transport, which are responsible for significant carbon emissions. One key policy intervention is green hydrogen obligations for industry, especially polluting sectors.

The climate goals are clear, and the risks to us and our next generations obvious as climate events and toxic air pollution impact our lives. For the renewable sector, for India, for the international political and financial system, and for all concerned citizens, the question on climate goals should not be: Can we do it? It must be, what will get it done?

The writer  is chairman and CEO of ReNew Power