India’s renewable energy targets may be overambitious
India has committed that 40 per cent of its total power capacity by 2030 will be based on renewable sources. As things stand today, that will be a tall order
Figures in Mw
Year
Wind power
INDIA
CHINA has decided to ‘nominate’ state-owned Power Grid Corporation to build it with assistance from the states.
Power Grid, which designed the plan five years ago, calculated the total expenditure at ~40,000 crore. The cost is five-fold now with targets being revised in the same quantum.
Tripathy says his ministry is trying to avoid any mismatch between generation and transmission capacities. “We have said that the investment in generation and grid should be 1:1. Currently it is 1:0.4. We want that by the time this renewable energy capacity comes up, there is enough grid capacity.”
Amid all this, the point being ignored is that renewable energy is an intermittent power source and grid-connected renewable energy would need the same amount of conventional energy as balancing power. Thus, there is equivalent coal- or gas-based capacity that needs to be built or fired along with renewable energy.
NTPC, for instance, can bundle thermal power and renewable energy and sell at an average rate. The bundling and the sale would also face tariff challenges. Solar power is priced at ~6-8 a unit and wind power at ~4 a unit. Bundled power would be ~3.5-4 a unit.
There are no buyers for expensive power. The financially stressed state utilities are not willing to buy even conventional power even at ~3 a unit. The historic drop of price for solar power to around ~5 is actually scaring away investors. Solar energy at that price is not viable in the country currently. Moreover, there is the absence of financing options.
“The biggest financial challenge faced by developers has been access to low-cost finance. While developers using imported components and cheaper EXIM Bank loans (10 per cent interest for 18 years) have thrived, those using indigenously manufactured equipment have had to avail costlier loans (13 per cent for 10 years). This has diminished the confidence among the investor community,” says Amit Kumar, partner (energy & utilities), PwC India.
As another officer involved in setting the climate targets puts it, “If we can do the 175,000 Mw target by 2022, reaching the 2030 target is not going to be tough. But the 2022 target was not really a bottom’s up assessment — it was an ambitious round number.”
Experts and investment trackers are still maintaining their stand that there are big investors betting on India’s renewable energy sector but are sitting on the fence awaiting clarity on policy.