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Why India might not achieve its 2020 energy targets

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  8 Jan 2017 12:00 AM GMT

By Shreya Shah

In April 2016, Piyush Goyal, the Power and Renewable Energy Minister, reiterated that India’s solar power target — 100 GW by 2022 — was achievable, but an IndiaSpend alysis shows that this expansion is challenged by weak infrastructure and a lack of cheap fincing. To achieve its targets, India must add 130.76 GW of renewable energy over the next six years, an average of 21.7 GW per year or, three times the capacity it added in 2016. This target is crucial for India in achieving its goal to reduce global warming — by the year 2100, the earth’s temperature could increase by an average of 1.8 degrees Celsius, in the best scerio, and four degrees Celsius.

In 2016, carbon dioxide (CO2) levels in the world crossed 400 parts per million, levels that will now last our lifetime. The power sector in India produces about half of all CO2 emissions in the country (805.4 million tonnes), according to the power ministry’s Draft tiol Electricity Plan 2016; coal is the most polluting of all power sources. In 2015, the world, through the Paris Agreement, agreed to limit the rise of the earth’s temperature to under two degrees Celsius by the year 2100. As many as 162 countries, including India, have submitted their Intended tiolly Determined Contributions (INDC), documents which describe steps countries will take to limit global warming.

As part of its INDC, India has committed to source 40 per cent of its electricity from non-fossil fuel sources by 2030. In October 2016, renewable energy made up 15 per cent of India’s installed electricity production capacity, up from 13.1 per cent in August 2015, according to government data.

The government’s ambitious target has created awareness about renewable energy. Even companies that do not benefit from government subsidies for renewable energy projects said the push for such energy has made consumers more aware about its virtues.

“More people now recognise that altertive sources can power energy within the household without being connected to the grid,” said Piyush Mathur, Chief Fincial Officer of Simpa Energy Networks, a company that build small energy grids that power a few households or a village. But India’s renewable energy targets are “highly optimistic and not realistic”, said Vibhuti Garg, a power sector expert at the Intertiol Institute for Sustaible Development, a Cada-based environmental non-profit.

India’s 2022 target is equivalent to 22 per cent of the world’s cumulative renewable energy capacity in 2015 — 785 GW, excluding hydel power projects, according to a 2016 report by the Renewable Energy Policy Network, an intertiol non-profit, based at the United tions Environment Program. Over the last quarter of 2016, the government auctioned fewer projects than needed to match its renewable energy goals, according to a report by the Mercom Capital Group, a US-based energy research and communications firm.

In 2015, India invested $10.2 billion of public and private money in renewable energy, about a quarter of the annual investment needed, according to a report by Institute for Energy, Economics and Fincial Alysis (IEEFA), a US-based research organisation. Government fincing forms only a small part of the total investment. In 2016-17, the government budgeted $758 million (Rs 5,035.79 crore) for renewable energy. The country needs $100 billion in asset fincing for renewable energy over the next six years, according to report by Bloomberg New Energy Fince (BNEF), a London-based energy consultancy. “The biggest bottleneck we see is fincing,” said Abhishek Jain, senior program lead at Council on Energy, Environment and Water (CEEW), a New Delhi-based research organisation. “If fincing is achieved, the targets are achievable,” he added.

The government’s 2016 Renewable Energy Invest Summit — which brings together finciers, and developers of renewable energy — has been indefinitely postponed, according to a government circular.

The delay is because renewable energy companies are far away from achieving their committed targets, and because the government is charging a high fee for the event. The delay was because the government needed more time to prepare for the event, a government official who requested anonymity told IndiaSpend.

In the government’s Renewable Energy Invest Summit in 2015, developers and manufacturers of wind and solar energy products and plants committed to nearly 240 GW of renewable capacity addition by 2022, but finciers committed money for only 70 GW added capacity, according to CEEW.

The government might be underestimating the total investment — $92 billion (Rs 6 lakh crore) — required for 175 GW of solar energy, the alysis added, suggesting an alterte higher investment of $120 billion to $147 billion (Rs 7.22 lakh crore to Rs 8.8 lakh crore).

Lenders and equity investors find it risky to invest in renewable energy because of uncertainty about whether publicly-owned power distribution companies will eventually purchase the power generated, regulatory issues related to land acquisition and government clearances for projects, and questions about the capability of India’s electricity grid to mage the extra energy generated, the report added. “The Indian renewable industry needs to be made attractive enough to invite funds,” said Tulsi Tanti, Chairman and Maging Director of Pune-based Suzlon Group, a company that has 9.8 GW of wind installations in India. “Banks and fincial institutions should earmark at least 20 per cent fince for renewable energy projects (while providing debt for a longer term of 20-25 years),” he added. (IANS)

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