Large scale deployment of clean energy technologies are essential for the success of the ‘Make in India’ story. The Indian industry stands committed in achieving this objective provided right policy and implementation framework is in place.
Here are five key measures for the private and public sector to collaborate for boosting renewable energy and wind energy in particular, for the success of Make in India.
Financial Innovation & Low cost funding
It is essential that the government creates new financing products and investment vehicles which will provide the much needed low cost funding with long tenure of 25 years for renewable energy sector. If we talk of wind power alone, for 8,000 MW a year, about Rs 40,000 crore project debt financing is required. India needs to establish rules for a Green Bond Market and facilitate inflow of low cost offshore funds such as Pension Funds into Renewables. Indian corporates are mostly leveraged either due to project delays or economic slowdown. Relaxing the sectoral and group exposure norms by RBI can be of immense help for renewable energy funding.
Government should introduce 5 per cent subsidy for using indigenous manufactured products, thereby promoting its Make in India initiative. National Clean Energy Fund and tapping of offshore funds by IREDA can also be leveraged. Alternatively, we can take learnings from Brazil financing scheme wherein local value addition is being encouraged with low cost high tenure funds. Financing innovation and low cost funding can have a revolutionary impact on the scaling up of renewables in India.
The current transition of wind energy from Feed-in-Tariff (FiT) to competitive bidding has given impetus to wind energy sector which will grow to about 10-14 GW market annually. While this has given long-term visibility to the investor, it has created temporary volatility. It is recommended that states honor the agreements which have been signed earlier and meet their non-solar RPOs. In the case of Solar, we need states to award bankable PPAs with targeted volumes on a regular basis. In addition to this, doing away with the Minimum Alternative Tax (MAT) for Renewables till 2022, ensuring strict compliance of renewable purchase obligations at state level and open access at no cost will also add momentum to this growth.
Policy for offshore Wind
India has a vast coastal line of 7,600 kms which offers enormous potential for offshore wind energy and it can potentially repeat the success achieved in onshore wind energy. India needsto work out a single window clearance and offshore wind project implementation framework at the earliest to convert these resources into reality. India has recently witnessed the commissioning of the first Operational Offshore Met Station by a private sector company. This met station is located in the Arabian sea, south west of Jakhau port in Kutch, Gujarat.
Land & Grid Infrastructure
Ensuring land availability and adequate power evacuation capacity are crucial aspects for scaling up renewable energy sources. The central government needs to work with the state governments to identify exclusive land with these resources and make it available for setting up of renewable energy projects with pre-clearances. Similarly, States need to ensure the ‘must run’ status for Renewable power feeding into grid is being implemented in true spirit.
Boost for exports
India currently accounts for very small percentage of the global trade in the overall electricity equipment exports but is a major importer. The ‘Make in India’ initiative should address this disparity and bolster exports. In India, Wind industry has been a net exporter whereas solar is a net importer. We have huge export potential for both Wind and Solar energy technologies and components.
Today, while exporting from India, the manufacturer has to battle against higher interest cost in India and logistics too, as India in not in the trunk shipping route. If the wind exports incentive of 2 per cent is increased to 5 per cent for a limited period, we will see massive growth in exports of wind energy.
In order to boost exports in the renewable energy technology, a dedicated credit line of USD 2 billion per year is required. Currently, due to a limited equity base, EXIM bank is unable to fund large scale overseas renewable projects worth USD 200 million or more. The EXIM bank requires large scale equity infusion.
To conclude, large scale deployment of clean energy technologies are essential for the success of ‘Make in India’ story. Indian industry stands committed in achieving this objective provided right policy and implementation framework is in place.
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About Tulsi Tanti
Tulsi Tanti is the Founder & Chairman and Managing Director (CMD) of Suzlon Group. Since establishing the firm in 1995, he has driven Suzlon to pursue sustainable development. He is an expert on alternative energy and leads the strategic growth initiatives for the businesses of the Suzlon Group.