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Subsidies vital for promoting green energy, says PM

According to reports, financing of green energy is one of the crucial issues for promoting expansion of clean energy, said Prime Minister Manmohan Singh.

Speaking at the Fourth Clean Energy Ministerial here, he said investments in green energy were subject to technological, commercial and regulatory risks.

For the moment, green energy was not viable without subsidy or regulatory incentives, he said, adding that investors obviously needed assurance that these incentives would continue.

The Prime Minister said market forces alone would not provide sufficient financing unless the risks of policy change were appropriately addressed. He hoped that the participants in the meet would be able to share their experiences on the issue of financing of green energy.

India proposes to double its renewable capacity to 55,000 MW by 2017. But, the pace at which this can be expanded is constrained by the fact that green energy is more expensive than the conventional energy, he said.

The cost of solar energy, for example, has nearly halved over the last two years, though it is still higher than the cost of fossil fuel-based subsidy.

If the cost imposed by carbon emissions was taken into account, then solar energy was more cost-effective, but it was still expensive, Singh said. However, with costs expected to fall further in the years ahead, it would soon be fully competitive at the margin, he said.

India has launched the Jawaharlal Nehru National Solar Mission with the objective of developing 22,000 MW of solar capacity by 2022 covering both solar photovoltaic and thermal.

The cost differential was being covered by different forms of subsidy and cross subsidy, the Prime Minister said.

“As we expand our reliance on solar energy, we are keen to ensure induction of the best technology and also to encourage domestic production of the equipment needed,” Singh said, adding that it was also a potentially competitive attractive production base for supplying to other countries.

“We, therefore, strongly encourage global manufacturers to set up production facilities in this area,” he said.

Expanding grid interactive renewable power requires supporting improvements in techniques of grid management to deal with the expected fluctuation in generation from these energy sources. There are fluctuations within the day, as in the case of solar energy, and also fluctuations over seasons in the case of wind.

“How we manage a system where important components fluctuate significantly is an important focus area for the Government,” Singh added.

He said battery storage was one solution and pump storage was another. “Here too costs are critical, but there is scope for cost reduction. We are keen to learn from the international experience,” he said.

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