Minister of Power and Coal Piyush Goyal is confident that the entire nation will be electrified by 2019. “We have taken out tenders of 21 gigawatt of solar energy,” he said, adding that so far, 10,000 contracts have been awarded on public private partnerships (PPP). Prime Minister Narendra Modi has set a target of 100 GW for solar energy by 2022. Goyal added that the 11,000 projects needed to meet this target will be handed out over the next two months. “We are going to ensure that 175 gigawatt of renewal energy comes into the Indian grid by 2022,” he said. As the solar spread increases, the government plans to set up a proper framework to boost domestic manufacturing for the sector. On bringing power tariffs down, Goyal said that the government is open to the idea of dollar-denominated tariffs. Prices have already fallen to Rs 4.50-5 kWh in recent times. This fall is attributed to lower interest rates, advanced technology and superior plant load factors, he said. Goyal further said that government could consider partial tariffs — designated in dollar or a basket of other currencies. Below is the verbatim transcript of Piyush Goyal’s interview with Sanjay Suri on CNBC-TV18.
Q: We have very ambitious renewable energy targets. Are we on course?
A: Absolutely, in fact, Prime Minister Modi had set the target of 100 gigawatts (GW) by 2022. That was five time scale up from the original target of 20 gigawatt. I am happy to inform you that in the first year itself of this programme we have taken out tenders of 21 gigawatt of solar energy and about 10000 of them are already converted into awarded contracts with the power purchase agreement (PPA), the balance 11,000 will be done in the next month, month-and-a-half. So we would possibly reach 20 gigawatt what was the original 2022 target next year itself and we are going to take this on a mission mode to ensure that 175 gigawatt of renewable energy comes into the Indian grid by 2022.
Q: That’s looking at the sunny side of things but do you think the government needs to do more to boost and to provide more support for solar manufacturing.
A: Certainly, you are absolutely right and very soon we will be coming out with a framework to boost the Indian manufacturers to had them set up newer plants right up to the silicon wafer manufacturing and we are looking at trying to create a capacity base of at least 10 gigawatt annually within India and I shall be going to the cabinet shortly with a proposal to support them with incentives to set up manufacturing possibly give them firmer prices for power, which is an essential ingredient to manufacture in India and also give them support in terms of guaranteed offtake for a certain number of years.
Q: Well a lot of the firms say that anything below Rs 5 a unit is unsustainable we have seen the case of SunEdison at Rs 4.63 kWh pulling out. Do you think the government needs to review its policy here?
A: SunEdison has not pulled out. The parent company got into trouble so the price is not as if SunEdison is the only bidder at that price. There are at least 50 companies who have bid around that price and now there are many, many companies who have bid much lower than that price. So I think there have always been business failures in every field. You are right now sitting in the United Kingdom (UK) with a failed steel company, so it does not mean that steel industry has failed or anybody in the steel industry has failed. So it can happen to any one company doesn’t reflect at all on the sector as such. Prices are going to get more competitive. It’s a transparent bidding. It’s not as if the government has asked anybody to bid low or high. Everybody has equal opportunity and many companies have chosen to bid around that level.
Q: You spoke earlier of Dollar tariffs where are we with that?
A: We are open to the idea we had thought that would be the way to take tariffs southwards, but thanks to technological innovation and the transparency and honesty with which we line our bidding process prices have already fallen by 35 percent and my original target was to bring it down to below Rs 5 kWh through the mechanism of Dollar tariffs. That’s happened already thanks to lower interest rates, thanks to technologies bringing superior plant load factors, thanks to elimination of corruption from the system which possibly may have prevailed before Prime Minister Modi’s government came in, so we are now already at tariffs which are anywhere between Rs 4.50-5 kWh. Then I want to look at the next phase of bringing tariffs down. I am open to the idea to explore Dollar tariffs, so one suggestion has been that we should look at partial tariff designated in Dollars or a basket of currencies.
Q: How would that work?
A: Euro, Dollar and Yen could become a basket of currencies and the debt component of a typical renewable energy project could be covered through a defined Dollar denominated or a basket denominated tariff, which could be bid out and the balance costs that’s the labour that goes in, the (operations and maintenance) O&M that goes in, the return on equity that goes in that could be a Rupee tariff.
Q: You think such a model could help draw in foreign money?
A: We already seeing a lot of foreign money coming into India such a mechanism would make it easier for the management of foreign debt because they would not have to be worried about the Rupee foreign exchange currency risk.
Q: Is that what you are telling potential investors here.
A: That issue never cropped up so far but if it does crop up I am open to the idea as long as its brings my tariff downs significantly lower, because I have the confidence that the Indian Rupee which has outshone other currencies in the last few months will continue to remain stable and strong.
Q: Well to speak of the unavoidably unclean you are taking the coal cess from Rs 400 to Rs 600.
A: From Rs 200 to Rs 400.
Q: So is a rollback on that possible?
A: Not at all. We believe that India is a very responsible global citizen. In fact, I think the western world particularly Europe and America should learn from Indian experience. We are the only country in the world which actually taxes carbon to the extent of now nearly USD 6.5. I wish other countries in the world would take this message. They have merrily for the last 150 years they have been spewing carbon into the atmosphere and enjoying the benefits of low cost fossil energy. India has shown its responsible governance model where we are taxing carbon and using that money to support clean energy.
Q: India has also been saying as other developing countries that they should pay the price for it somehow and find a model for doing it, but that is not happening, is it?
A: Not at all. In fact I feel the western world has not come up to expectations at all and there needs to be more concern and the western world, the developed world needs to fulfil its obligations particularly considering they are responsible for problem in the first place.
Q: So, India is being unfairly attacked over coal?
A: Absolutely. India needs coal as a base load without which we won’t be able to add any more renewable energy. After all nobody in the world would want Indians to get power during the day hours and then the rest of the time live in darkness.
Q: On coal, the Odisha CM has suggested a sharing basis between states and the centre for the cess. Is that something that’s being considered?
A: Well in any case all the money that is collected in the cess does go back to the states in encouraging and supporting renewal energy programmes in several states and as far as the state is concerned they get a royalty for every tonne of coal that’s mined, so Odisha is already enjoying that royalty.
Q: So when is the next allotment due for coal mines in the state.
A: I think we are coming out with some more mines for the states very soon.
Q: Any idea how many blocks?
A: About eight blocks.
Q: And very soon, we are expecting this year?
A: Oh yes, of course. We don’t take very long to take action once we make up our minds.
Q: The coal mines nationalisation provided for commercial mining of coal and we have had some state PSUs getting into the act. What about the private sector, is that on its way?
A: At an appropriate time, yes
Q: That is not saying a lot?
A: I believe in calibrating the whole process. Today India has sufficient coal, none of our power plants, none of our other user industries is having any stress or problem with coal. Our thermal coal imports are falling. Last year we were able to save nearly USD 4 billion on imported coal. Going forward I hope to save another USD 5 billion in terms of reducing the dependence on imported coal. So, India is on the right track as far as coal is concerned. Our prices are reasonable. Our power out of coal based thermal plants is at affordable prices. When I feel the need, when I realise that we are not able to cope up with the increasing demand we will certainly encourage private guys to come into commercial mining also.
Q: What do the big firms look like? How much is going to be produced by way of energy and how much required this fiscal year in terms of energy production, the shortfall?
A: There is zero shortfall. Today India’s energy is surplus. Every part of the country can buy power on the exchange. In fact I have taken out a mobile app which you can download on your phone.
Q: How can you be energy surplus and not have energy across the villages?
A: That is right. That is the problem. The distribution network and the last mile connectivity has been the biggest challenge of the country which we are addressing. The Prime Minister gave a very ambitious goal of reaching power to 18,452 villages and these are the remotest corners of the country. After all it took us seven decades after independence and we still don’t have power in these villages. The Prime Minister announced on August 15 that we will ensure that within a 1000 days all of these villages also get power. These are the census villages, then we have hamlets, smaller habitation which we have to reach out to. I am fairly confident we will reach power to each one of these 18,452 in much less than 1000 days. And by 2019 we are very confident that we will be able to reach power to every home in the country through the Deen Dayal Upadhyay Gram Jyoti Yojana. That is being conceptualised on the model of the Gujarat energy story.
Q: Finally, so if we are energy surplus what is coming off the mega megawatt power projects?
A: Because while we have enough energy today we will obviously have to plan for the future and with the kind of economic growth and evolving economic scenario in India my own sense is India will probably quadruple its energy requirement in the next 14-15 years.