Relevance: Mains: G.S: Paper II: Governance
The needs of India’s burgeoning population are rising. However, the status quo of resources might not be adequate to fulfill the growing demands of a fast-paced economy. Country’s per capita consumption of electricity stands at a meagre 1.100 kWh/year which is much lower compared to other large economies like the US and China. Demand for power is set to rise further with increasing rates of urbanization and industrial growth. Plugging this demand-supply gap by augmenting capacity in the power sector is a key priority for the policy makers. Unfortunately, our traditional sources of energy generation are already nearing their saturation levels. India must also honour its global commitments on curbing greenhouse gas emissions as per the Paris.
Here are five areas that need more attention and focus, to take the Indian solar power industry to the next level:
- Technology:
- While solar is becoming an important contributor to energy needs in India, there is still a huge gap to be filled.
- Rooftop solar solutions for example, can add large capacities but certainly need a push from respective slate governments.
- Newer advancements in the field like floating solar can play a vital role in increasing capacity
- Considering the huge potential in the sector, the government and private entities must emphasise and support R&D and adoption of latest technology and innovations in this area.
- Policy Push:
- Solar power tariffs have decreased over the past few years making solar energy more accessible to the common man due to technological advancements and policy push.
- However, tariff margins discovered in reverse auctions have been pushed lower in recent years leading to a squeeze in profit margins.
- Considering that tariffs are now significantly lower than other sources of energy, we need to move towards healthier tariffs to help private players work with sustainable business models and attract a higher capital inflow.
- This will eventually lead to augmented supply and further lowering of prices for the common people.
- Respective state governments should also accentuate the of solar power generation with regular capacity addition.
- Discom Health
- Despite the government’s initiatives to reinvigorate power distributing companies, the health of state discoms has not improved much over years. T
- hese companies form a crucial link in the of energy an impact on the over-all process.
- Hence, maintaining discoms in good shape forms an extremely important link on the to 2022.
- The healthier the distribution the more power they power supply.
- Steps should be taken to strengthen the discoms such that they are able to support higher tariffs, RPOs
- Financial Reforms:
- Reforms in banking systems will go a long way in assisting the renewable energy sector.
- As oOf now, sectoral categorisation of banks sees renewables as part of the power sector, due to which, for most banks, the loan limit is majorly consumed by thermal plants and only a small fraction of the fund remains available for the renewables sector.
- Reality is that the renewables sector has clocked exponential growth and contributed handsome revenues to the exchequer.
- Considering the above, renewables should be categorised as a separate sector.
- This will help widen access to funds and simplify the process of loan procurement for companies.
- The government can also consider according priority sector status to renewables, given its strategic importance.
- Diverse bond markets will help in securing affordable finance for clean energy projects in the future.
- A healthy banking system will be able to provide more funds at a competitive cost to propel the renewables.
- Enabling Ease of Doing Business:
- The government’s pursuit of reforms has created a more conducive environment for investments in India, reflected in our steady rise in Ease of Doing Business rankings over the past couple of years.
- However, faster processing of approvals for project implementation across the value chain, especially conversion approvals of land in different states would be of great help to the renewables sector.
- The government should work on building more robust transmission systems. This will not only increase investor faith in the overall process but will also ensure no MW loss during power distribution.
Achieving the ambitious target of 100 GW solar power capacity by 2022 need an effort from all the stakeholders, including the central and state governments’ financers, discoms and private players. The government has a key role to play — not only by providing the required policy support but also acting as a central coordinator— guiding and synchronising efforts from various stakeholders to catalyze the solar industry’s growth.