From promises to policy

Renewable energy needs government to draft sensible policy

Judged solely by the promises made by prospective green power producers at the government's conference on renewable energy, RE-invest 2015, India's declaration that it would create 100 gigawatts of solar power by 2022 now looks surprisingly modest. Over 290 public and private companies made commitments for setting up capacity to generate nearly 260 GW of renewable energy in the next five years. This is far higher than the government's lofty targets of 100 GW solar, 60 GW wind, 10 GW bio-energy and five GW hydro power generating facilities by 2022. Unsurprisingly, however, the credibility - not to mention its feasibility - of these goals is likely to be questioned by many. After all, despite numerous fiscal and other incentives, no more than around 3.3 GW of renewable power capacity has actually been installed till now. Of this, around 3 GW is in the solar sector alone. The huge potential of the wind, biomass and other sectors has remained by and large unexploited. Further, these pledges come at a time when some major global clean energy players have begun to develop cold feet in view of oil prices plummeting to nearly half their levels in June 2014.

The imperatives of renewable energy go beyond a simple cost-based substitution away from petroleum. India is obliged to tap this sector to improve its energy security as also to contribute to the battle against global warming. At present, the bulk of the country's total installed power generation capacity is based on coal - the most environmentally harmful mode of energy production. The outcome of this conference, and the grand promises made, are likely to have a bearing on India's "intended domestically determined contributions" (INDCs) towards emission reduction which all countries have to communicate to the United Nations by June. This is part of the process to finalise a new international agreement on climate change at the next climate summit at Paris in December this year.

The commitments made at the conference will not become a reality without major policy changes. The availability of proper financial instruments and an increase in the ease of doing business are the most critical. Access to land, the creation of infrastructure for power evacuation, the pricing and marketing of green electricity, and the ready availability of the latest equipment are also notable. Technology is doing the rest: the capital cost per megawatt of solar power has fallen from around Rs 14 crore to less than Rs 8 crore. This has brought down the per unit production cost of power from over Rs 20 at one stage to close to grid parity with thermal power. But these costs need to be trimmed further to insulate renewable energy against fluctuations in the prices of conventional fuels. Besides, marketing of green energy would have to be assured though strict enforcement of renewable power purchase obligations of public and private power utilities. Moreover, considering the inherent irregularity in renewable electricity generation, the development and use of energy storage devices, too, will need to be promoted. Thus, for the government, work on renewable energy must go beyond making promises.