India will look to be more innovative in its approach to garner additional investments worth Rs 1.75 lakh crore for having 35 GW of renewable power generation capacity next year to meet the ambitious target of 175 GW of clean energy capacity by 2022.
At present, the country has a total installed renewable energy capacity of 90 GW. This includes 39 GW of wind and 37 GW of solar generation capacity.
Around 50 GW of renewable energy capacity is under construction and there is also a strong pipeline of 30 GW for new bids.
"There is a fund requirement of Rs 1.75 lakh crore to achieve the balance capacity of 35 GW (under bidding/ to be bid out/ auctioned) to achieve an overall target of 175 GW," Director General of Solar Power Developers Association Shekhar Dutt told PTI.
He also said that implementation of renewable projects and innovation in tendering them to attract investors would play a key role in 2021.
According to him, India needs to design innovative tenders with the inclusion of wind, solar and energy storage to ensure that renewable can replace fossil fuels to a great extent.
This year has been challenging for the renewable energy sector but the industry has been able to withstand the crisis caused by the pandemic with support of the government.
Moreover, confidence of investors in the sector has soared further as was evident from solar power tariff breaching the psychological barrier of Rs 2 per unit.
Solar power tariff dropped to an all-time low of Rs 1.99 per unit in an auction of projects of 500 MW capacity by Gujarat Urja Vikas Nigam Ltd (GUVNL) in December.
Prior to that, the tariff had declined to a record low of Rs 2 per unit in an auction for 1,070 MW projects conducted by the Solar Energy Corporation of India (SECI) in November.
In July this year, solar power tariffs fell to a low of Rs 2.36 per unit in an auction of 2 GW capacities by the SECI.
Now, in order to maintain the momentum, the government will have to be more proactive and innovative to attract investors into the sector.
India had set an ambitious target of having 175 GW of renewable energy capacity by 2022. This includes 100 GW from solar, 60 GW from wind, 10 GW from biomass and 5 GW from small hydro power.
Talking about the challenge of bringing required investment next year to achieve the 175 GW target, Union Power and New & Renewable Energy Minister R K Singh said, "We are going to come out with more innovative bids (in 2021)."
He told PTI that earlier efforts of the government helped to position India as the most favourite destination for investment, especially in the clean energy sector and it is evident from $64 billion investment in renewables.
The minister also cited some examples of round the clock, hybrid and manufacturing linked auctions for clean energy in the country.
As per the government estimates, the demand for domestically manufactured solar cells and modules is likely to be around 36 GW over next three years.
In November, Prime Minister Narendra Modi said there are huge renewable energy deployment plans for the next decade.
"These are likely to generate business prospects of the order of around 1.5 lakh crore rupees or $20 billion per year. This is a big opportunity to invest in India," Modi had said.
With the impact of Covid-19 on a gradual decline and higher visibility of vaccine availability, 2021 promises to be an exciting year for the renewable sector.
As per industry estimates, the cumulative capacity of 20 GW clean energy is scheduled to be commissioned, which shows increased opportunities for equipment suppliers.
Dutt said that agencies implementing renewable energy projects are facing challenges with respect to signing Power Sales Agreements (PSA) for around 16 GW with power distribution companies (discoms) and electricity procurers.
Such a situation shows that the implementation of the ambitious target of 175 GW will be possible only when there are assured buyers for clean energy across the country. Otherwise, it will not be viable to set up huge generation capacities.
Meanwhile, there is a continued focus on 'Aatmanirbhar Bharat' initiative to boost local PV (Photo Voltaic) manufacturing as well as ensure quality and competitiveness against imported PV cells. This is being done by way of providing support through the government's PLI (Performance Linked Incentive) scheme.
However, Dutt said that till the time domestic manufacturing capacity of requisite quality is not enough to meet demand, restrictive measures must be avoided.
According to industry players, the current focus is on developing large-scale ultra mega solar power projects but there are challenges such as land acquisition, sub-optimal utilisation of power evacuation infrastructure and higher transmission losses and charges.
"India is endowed with abundant sunshine across the country with a variation of 15-20 per cent. Hence, small to medium scale projects (50-100 MW) can be developed at load centres in 700+ districts located across the country, which will result in lower transmission losses, better utilisation of transmission assets, equitable job creation and development etc," Dutt said.
Structural reforms for discoms are being looked at to ensure timely payment to power producers.
Amendments to Electricity Act, 2003 and Tariff Policy, which has provisions to address the issues, are awaited by the industry.
Imaan Javan, Director of Operations at Suntuity REI, said that "with sufficient government policies, support and schemes in place and educating people on the advantages of clean and sustainable energy, I believe that we can definitely achieve our renewable energy target of 175 GW by 2022".
"Though we have already seen various measures from the government like Safeguard Duty, 'One Sun One World One Grid' initiative, anti-dumping duty, Vocal for Local and Make in India, more strict imposition of these policies will help India be at par with her global counterparts and penetrate into the world market," Javan said.
Suntuity REI is a leading solar energy solutions provider.
The renewable energy industry also expects higher coordination between central transmission utility and agencies implementing renewable energy projects to ensure seamless development of transmission evacuation infrastructure.
About increasing the share of renewables in the country's energy mix, the minister said that India already has 38 per cent installed electricity generation capacity (140 GW) coming from clean energy and that the 40 per cent target will be surpassed in 2021.
India has set an ultimate target of having 450 GW of clean energy by 2030.