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Policy’s role crucial in speeding up growth on renewable energy front

According to reports, the new government, with a majority in Parliament, has the opportunity to reshape the energy sector. We can focus on energy security being a core element in the strategy for long-term growth. The new government has the opportunity to have a holistic review of the energy sector and to formulate a coordinated and synchronised approach to revitalise it.

As the economy liberalised, the thrust of energy policy was on developing conventional energy as the primary engine to drive growth. As we progress, the contours of policy discourse on energy are shifting from rapid expansion of conventional energy sources to assessing their longterm economic, strategic and environmental consequences.

The economic and strategic impact of reliance on imported fuel to the carbon footprint and environmental consequences of large thermal or nuclear plants have taken centre-stage in the energy debate.

The role of non-conventional energy, especially renewables, has to move centre-stage. In a country blessed with abundant sources of renewable energy, the industry, market and the policy framework have evolved rapidly in recent years. In the last decade, the renewables sector has moved from the fringes to being one of the major sources of energy. This has been achieved with a combination of a supportive policy framework and technological advances, which have made it commercially viable and attractive for investment. The move towards renewables has reduced the carbon footprint from generation, and the potential benefits of greater substitution of conventional energy by renewables are evident. Renewables have the potential to reorient the way we think about energy.

The viability of small or micro renewable plants and the rise of off-grid solutions can open up new ways to look at providing energy at a local level. Let us take the example of the poor man’s fuel, kerosene. The government has heavily subsidised it to keep it affordable for weaker sections of society. The subsidy is around .`20,000 crore. If this subsidy could gradually be transferred to build generating plants supported by adequate infrastructure for renewable energy, like solar, wind and other sources, one could reduce the dependence of a large section of the population on kerosene.

In the last decade, the renewables sector has grown to 32,000 MW. However, recently, it has faced policy challenges. Renewables, especially wind and solar, have recently achieved a meaningful scale, but need support from policy. A few big-ticket measures could help. These include dedicated evacuation infrastructure linked to the national grid to allow optimum utilisation of renewable power, and to reduce the impact of geographical factors in the renewable potential of each state.

We also need to move towards market-determined pricing, adjusting for the inherent advantages of large conventional power stations. An area needing immediate focus is the Renewable Power Obligation (RPO) framework, which was designed to encourage state electricity boards (SEBs) and captive consumers to use renewable energy. We need to implement the RPO by a carrot-and-stick policy, by recharging the market for Renewable Energy Certificates (REC), the tool for implementing the RPO framework, and charging penalties for noncompliance by SEBs and consumers.

This will create a viable market for renewable energy. The sector needs pricing certainty on RECs beyond 2017, to invest in addition of capacity. We also need implementation of open access in the true spirit of The Electricity Act, with competitive pricing to allow unrestricted national transmission of renewable power. Alogical follow-up would be the complete integration of large renewable plants in the national grid with scheduling and forecasting to foster effective utilisation of renewable power.

The renewables sector has matured and is moving towards becoming a major participant in the energy landscape. Now, policy has to step up to enable further growth. The sector needs the support of strong institutional, financial and legal mechanisms. A move in this direction will go a long way in achieving the goal of an energy self-reliant India by 2050.
The writer is managing director and CEO, Green Infra

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