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Renewables have a bright future

According to reports, in a week of show-and-tell as India opens its doors to investors with two coinciding summits in Gujarat, the jewel in the crown remains the 10MW Narmada Canal Solar Power Project. There is perhaps no better example (yet) showcasing India’s renewable energy prowess; but to meet the ambitious national targets the Modi government has set — achieving 100GW of solar power by 2022 — the country should look beyond Gujarat.

A hundred GW in solar power will raise the country’s renewables capacity (including hydro) from 30 per cent of the total now to 50 per cent in just seven years and enable access to modern energy for the off-grid millions surviving on wood, dung and kerosene in rural India.

Access to electricity in rural areas through renewable energy improves health, saves money, strengthens livelihood and reduces waste by supporting productive uses such as refrigeration for dairy and other agricultural products. However, cost competitive renewable technologies and the recent decline in costs for solar photovoltaic (PV) systems can only do so much; without the right policies and competitive financing, India will likely fall short of its target.

The Global Environment Facility’s experience in over 50 countries shows that predictable and stable policy is crucial for investment to flow into renewable energy. The government needs to push reforms across the renewables sector.

In addition to not imposing duties on imported solar, India should accelerate cooperation between foreign and domestic manufacturers to ensure adequate supply of equipment. States can do more to ensure large power consumers meet minimum requirements to purchase renewable power.

A modern and profitable utility sector is vital for expanding renewable energy capacity. The sector needs urgent support in order to maintain financial stability, retain access to capital, and plan and launch grid modernisation — not only for efficient storage and distribution of renewable energy but also for ensuring steady power supply to consumers. Pursuing pricing reform, rolling out new technologies (such as smart meters) and developing thoughtful solutions to free-riders are important areas.

A way to level the playing field is by removing existing fossil fuel subsides. With global oil prices so low, now is a good time to examine pricing regulations and reduce subsidies, redirecting the support to sustainable energy efforts.

Renewable energy offers the ripest opportunity to attract capital for investment and create jobs. Wind and solar energy generate more jobs per megawatt than coal and natural gas. While global leaders such as Suzlon and Tata are making bold moves to promote wind and solar power, small and medium enterprises can take the lead on residential and commercial solar PV installation opportunities. Industry-led training programmes, such as those offered by Ficci, can help SMEs expand capacity for the installation and maintenance of renewable power systems. The banking sector can support such initiatives.

The private sector, in partnership with associations and NGOs, can increase its effectiveness in deploying renewable energy. For example, independent power producers can work together to develop standardised power purchase agreements that will speed up project approval and allow aggregation of small projects into attractive large investment opportunities. While the Ministry of New and Renewable Energy is already promoting the use of solar PV powered irrigation pumps that reduce costs and pollution, much more can be done to encourage small businesses to develop models that deliver, install, and maintain home, village and mini-grid renewable energy systems.

India unequivocally needs greater investment in renewable energy. The challenge lies not in the government’s intent or approach but its agility in scaling up.

The writer is the CEO and chairperson of the Global Environment Facility (GEF) and a former deputy vice-minister of finance, Japan

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