India is surging ahead in the area of renewable energy. The renewable capacity has reached 73 gigawatt (GW), which is 20 per cent of the country’s total energy capacity. The generation has increased, and solar energy has made tremendous strides. However, owing to several issues including those of policy inconsistencies and problems faced by discoms, meeting the ambitious 175-GW renewable capacity target by 2022 will be very difficult.
A new analysis released by Centre for Science and Environment (CSE) – The State of Renewable Energy in India 2019 says that the government needs to act fast to fill certain policy gaps if it wants to meet its renewable energy targets.
The report has recognised that some favourable policies, combined with good market conditions, has seen the renewable energy sector emerge as a sunshine industry. Over the last four years, large-scale solar has seen an average annual growth rate of over 70 per cent. The installed solar capacity has increased from 2.6 GW in March 2014 to 23.1 GW in June 2018 – large-scale solar comprises over 94 per cent of this. At under Rs 3 per unit on an average, wind and solar energy are now cheaper than coal power.
However, it also highlights that the sector has witnessed a slowdown in 2018 triggered by financial difficulties being faced by distribution companies, import tariffs, and subsequent tariff increases.
The CSE report highlights some of the key concerns the sector faces today:
Inconsistent policies have been the bane of the sector. Nothing can be more disruptive for an emerging sector that seeks to attract global investors, than abrupt policy changes. Solar module manufacturing industry is a perfect example of this. The government had reserved auction capacity for domestic manufacturers, but this drew a World Trade Organization censure. Import duties have been applied and then removed; currently, a safeguard duty of 25 per cent is being levied on imported modules.
Distribution companies are under-performing. The financial stress that discoms are in has meant payment delays for developers, cancellation of auctions, and lack of enforcement of contracts. This dampens investor confidence and developers’ interest.
The solar rooftop has failed to make any headway in the current market which is skewed towards large-scale renewable energy. The country is aiming for a 40-GW capacity by 2022, but till November 2018, only 1,334 megawatts (MW) of grid-connected solar rooftop systems had been installed. Also, the preference has been for commercial and industrial installations – residential consumers, who hold immense potential, account for less than 20 per cent of the total installed capacity.
Distributed energy has been pushed to the back-burner. Almost all the schemes that have been floated for ensuring access to energy for the people, such as SAUBAGHYA, are tied to extending the grid and connecting un-electrified households to centralised distribution and transmission networks. But the CSE analysis shows that grid connectivity does not lead to the availability of electricity or consistent supply.
Based on these observations the report has made the following key recommendations:
- Charting an ambitious low-carbon growth pathway by look beyond the INDCs (Intended Nationally Determined Contributions).
- Increasing the share of distributed renewable generation – solar rooftops and mini-grids.
- Encouraging ‘smart grids’ that use communications infrastructure, control systems and information technology for efficient delivery.
- Rethinking the discom model. Much will depend on the health of discoms, which are at the heart of the electricity market.
- Investing in developing inexpensive energy-storage capacity. Indigenous research can improve upon existing technology in terms of cost and performance. Policy support can drive scale for the battery industry.
- Making energy access a key priority for the growth of the sector.