According to reports, as part of its blueprint for energy security, the National Democratic Alliance (NDA) government plans to float five funds of $5 billion each, targeted at promoting green energy sources. India’s ministry of new and renewable energy (MNRE) plans to get the help of state-owned and private sector financial institutions such as Power Finance Corp. Ltd (PFC), Rural Electrification Corp. Ltd(REC), Indian Renewable Energy Development Agency (IREDA), IFCI Ltd, SBI Capital Markets Ltd and ICICI Bank Ltd to create a corpus of $25 billion.
The Bharatiya Janata Party (BJP)-led government has substantially revised an earlier solar energy target of achieving 20,000 megawatts (MW) capacity by 2022 to 100,000MW. In addition the government plans to have 60,000MW of wind power capacity by then, requiring an overall investment of around Rs.10 trillion in the renewable energy sector. “We are seeking participation from both public sector and private institutions for setting up these dedicated green funds, given the funding requirements for India’s renewable energy sector,” said a top government official, who spoke on condition of anonymity as the plan is in its initial phases.
The government’s renewed focus on green energy comes in the backdrop of the US and China inking a climate change deal wherein the US will reduce its emissions by 26-28% below its 2005 level by 2025 and China will reach the peak of its harmful carbon dioxide emissions in around 2030. Another government official who also didn’t want to be identified confirmed that the government is thinking along the lines of creating large green-energy focused funds. “The funding requirements of the renewable energy sector is large and various opportunities are being explored. Meetings are being held for the same and bankers are being consulted.” The BJP made energy security a key part of its general election campaign.
The government’s strategy to focus on renewables also stems from the fact that India has an energy import bill of around $150 billion, which is expected to reach $300 billion by 2030. India imports 80% of its crude oil and 18% of its natural gas requirements. A senior REC executive who did not want to be identified said the plan is at a “preliminary stage”. An IFCI spokesperson said in an emailed response that the company had “no information on government’s plan to create these funds”. Queries emailed to the spokespersons of MNRE, PFC, IREDA, SBI Capital Markets and ICICI Bank remained unanswered till press time.
In a related development, Union minister for power, coal, new and renewable energy Piyush Goyal said that the government will play the role of a facilitator for the renewable energy sector. “Lending is a credit decision without any political interference. We can only give the assurance that plants set up in the renewable energy space will be sustainable,” Goyal said at a press conference in New Delhi. In an effort to promote renewable energy, last year’s budget doubled the clean energy cess on Indian and imported coal collected under National Clean Energy Fund (NCEF) to Rs.100 per tonne, aggregating Rs.6,000 crore every year. In the budget, finance minister Arun Jaitley also expanded the scope of NCEF’s use to include financing and promoting clean environment initiatives and funding research towards that end. In a further attempt to meet the funding requirements, India has accessed credit lines through IREDA for financing renewable energy projects. These include 30 billion yen for 30 years from Japan International Co-operation Agency; a $1 billion medium and long-term guaranteed loan from US Ex-Im Bank and €100 million from the Agence Francaise de Développement of France.
India’s National Action Plan on Climate Change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020. Of India’s installed power generation capacity of 2,55,012.79MW, renewable power has a share of only 12.42%, or 31,692.14MW. Mint reported on 19 November that the government plans to train around 50,000 people in areas related to solar power—a so-called solar army. In addition, the government is also working on a strategy to turn some 20,000 unemployed graduates into entrepreneurs to help it meet its ambitious solar power generation targets—a plan it will implement in concert with state administrations.
The government’s initiatives in renewable energy include plans for setting up of solar parks totalling 20,000MW over a period of five years in states, that will require central government support of Rs.4,050 crore. Also, organizations under the ministries of defence and home would set up 300MW of grid-connected solar photo-voltaice projects with viability gap funding provided under the Jawaharlal Nehru National Solar Mission. In addition, 1000MW capacity will be set up by state-owned companies and government organizations such as NTPC Ltd, NHPC Ltd, Coal India Ltd and the Indian Railways.