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‘Railways can raise Green Bonds to fund renewable power projects’

‘Railways can raise Green Bonds to fund renewable power projects’


As Indian Railways looks to lower its energy costs, sectoral stakeholders have mooted the idea of raising Green Bonds to fund solar energy generation projects. At a national conference on decarbonising Indian Railways, organised by the Council on Energy, Environment and Water (CEEW) and UNDP, SK Pattanayak, Managing Director, Indian Railway Finance Corporation, the fund raising arm of Indian Railways, also suggested that the Railways could seek tax-free status for the Green Bonds, with the sole aim to lower energy costs.

However, Mohua Mukherjee, former Energy Lead, World Bank, called for identifying projects for implementation before raising funds. Addressing the conference, Railway Minister Suresh Prabhu said: “We want Indian Railways to become a green engine of growth. Decarbonisation is extremely important for the Railways. We have set up a target of electrifying the entire network in the next 10 years with at least 90 per cent of track electrification in the next five years. Waste-to-energy, energy efficiency, energy audits and restoration of water bodies are areas in which we are looking to improve our resource efficiency.”

Sudhir Garg, Executive Director-Energy Management, Railways, said the Railways could consider adopting the engineering procurement contract (EPC) model for developing solar power and have Railway employees operate the plant. He also pushed for further open access for the sector. As per a study released by the CEEW, Indian Railways could draw up to 25 per cent of its electric power needs from renewables and achieve the target of 5 GW of solar by 2025.

Investment requirement
For this, the Railways would need an investment of $3.6 billion to meet the 5 GW target. A potential 5 GW target provides a unique opportunity for solar developers with an estimated 1.1 GW coming from rooftop and 3.9 GW from utility scale projects. The Indian Railways is a guaranteed consumer and has a growing electricity demand, which should mitigate any perceived counter-party risks for project developers or investors, said the study. Commenting on the CEEW study, Minister of State (IC) for Power, Coal, New and Renewable Energy, and Mines Piyush Goyal said, “The decision to domestically source equipment is another positive move from Railways and will largely benefit the domestic industry. Today, we are supplying power at reduced rate of 60-70 per cent than what it was three years back even at peak demand.”

However, Sunil Jain, CEO & ED, Hero Future Energies, said insisting on the use of indigenous technology would push up the prices.Arunabha Ghosh, CEO, CEEW, said: “An R&D fund, in partnership with the Ministry of New and Renewable Energy and the Ministry of Science and Technology could be set up to promote innovation on energy-efficiency and integration of renewables in the Railways.”

12 States identified
CEEW said, based on railway operations and land availability, 12 States have been identified wherein rooftop and utility scale projects could be taken up. The study ranked these 12 States in terms of ‘ease of doing business’ for developers, and found that Madhya Pradesh ranked the highest for utility-scale projects, while Karnataka ranked highest in the case of rooftop projects. Going forward, two key issues for the Railways are standardisation of power purchase agreements and setting up regulatory guidelines in collaboration with Central and state electricity regulators, as well as resolving the issue of clearances around the benefits of open access provisions accruing to the Railways, said the study. In 2015, the Indian Railways announced its 1 GW solar target and had achieved about 37 MW of wind and 16 MW of solar across its operations until March 2017. It has also tendered close to 255 MW of rooftop solar projects, of which 80 MW has already been awarded. In addition, the Railways are in the process of tendering about 250 MW of land-based solar projects.

Anand Gupta Editor - EQ Int'l Media Network


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