Post colonization, India broke the shackles of dependency and western superiority through constant efforts.
It became the light for all the third world countries in times when one had to take refuge under either of the two superpower headed factions.
Now, India has spearheaded its efforts towards preservation and betterment of its people by providing greater opportunities and its environment.
It has begun undertaking climate soothing measures like integrating sustainability in most spheres, curbing emissions through promoting renewables and green sources of Energy or creating more carbon sinks etc.
But there have been a few studies about different aspects of Climate action those are revealing loopholes in our approach.
Recently, the concept of Net-zero and our adamant approach towards it, has been negated as it may begin sabotaging the emissions control in leau of merely offsetting the carbon through inadequate and inflexible afforestation measures.
We may have been delighted to know regarding the prosperous Renewable energy even during the Covid prevailed and fed on every possible sector.
This piece of information was further shadowed by a revealing report “Mapping India’s Energy Subsidies 2021: Time for renewed support to clean energy” that questioned the government’s rhetoric of promoting Renewable energy perspectives at domestic and international fora.
It clarified how and why the Indian government has reduced its subsidies to the renewable sector and simultaneously increasing the fossil and oil-gas subsidies.
Lack of subsidies can arrest the growth of this crucial sector.
Growth in Indian Renewable sector:
The installed renewable production capacity has increased in India over the past few years, posting a CAGR of 17.33% from FY 2016-20. With favoring government policies and strengthened economics, the sector has become attractive for investors from all backgrounds.
India’s energy demand is expected to reach 15,820 TWh by 2040, renewable energy will likely play a greater role.
The government has aimed for installing 227 GW of renewable energy by 2022, considerably more than its 175 GW target assented in the Paris Agreement and further take it to 523 GW (including 73 GW from Hydro) by 2030 (450 GW under the Paris Agreement).
According to a data released by Department for Promotion of Industry and Internal Trade (DPIIT), the FDI (Foreign Direct Investment) inflow in the Indian clean energy sector stands at a staggering US$ 9.83 billion between 2000 and 2020.
The analytics from British Business Energy suggest that India has been ranked 3rd amongst the world countries based on its renewable energy investments.
That’s appreciable but all this growth can be arrested if one is to believe a recent report by Indian parliamentary panel stating that India needs Rs. 2.61 trillion to install the required capacity for its target of 175 gigawatts of renewable energy by 2022.
Worse is that this sector is facing financial challenges.
Over the past few years, the average annual investment on renewables sector has been touching Rs. 823 billion (Rs. 82,300 crore) but if investments continue to drop in at the same rate, 2022 aim will become a far-fetched dream.
What has the parliamentary panel suggested to overcome the proposed loss?
The panel has asked Indian Renewable Energy Development Agency (IREDA), the concerned public sector institution for financing the renewable energy projects, to garner more capital and step up to the occasion.
The ministry in charge (Ministry of New and Renewable Energy) shall provide “more long-term financing and concessional loans through multilateral and bilateral agencies” to help keep up with the projects’ growth.
An expert has told Mongabay India: “India should add a whopping 38 GW of capacity each year if we have to achieve our stated ambition of 450 GW by 2030. Experts say it might at best add 8 GW or so per year for the next few years but the gap is enormous”.
“Even if the market becomes ready and gains back strength, there needs to be a way to stir more capital flows from the private sector, and not focus on climate finance, which remains a dream.”
What has MNRE done so far in this regard?
To fill in the investment deficit, Foreign Direct Investment (FDI) in the sector has been allowed under the automatic route up to 100 percent. This may allow timely liquidity for the projects.
MNRE has setup the Ultra Mega Renewable Energy Parks (UMREPs) providing land and transmission for investors to easily initiate operations.
It has even helped in laying the transmission lines under green energy corridor scheme for an efficient power transmission mechanism in renewable rich states etc.
Non-Performing Assets (NPAs) numbing the Renewable sector too?
As per the panel’s report, 229 projects of 11.83 GW renewable energy capacity and worth Rs. 259 billion (Rs. 25,922.60 crore) have been financed by IREDA.
Still 86 NPAs with a total amount of Rs. 21.1 billion (Rs. 2110.64 crore) have remained lurching for money along with the other 31 overdue projects worth Rs. 17.48 billion (Rs. 1748.146 crore).
Therefore, a profound study of the reasons for these outstanding debts of the sector has been suggested in addition to the due diligence to be showcased in sanctioning such loans by IREDA.
Also, the respective state governments shall be fetched to solve the crisis, if need be.
“Energy investors are of the opinion that investments in assets, which don’t offer a futuristic bet, are locking the system. Clearing out the NPAs could relieve the burden to the power sector and offer a new lease of life.”
The panel has highlighted that “non-payment of dues to renewable power generators/developers may result in the accumulation of more stressed/non-performing assets which may, in turn, add to the stress of lending financial institutions thereby creating a vicious cycle with possible cascading effects.”
The industry experts have highlighted that India needs to channelize its public climate finance for seeding further private investment into climate action required, i.e., for financial adaptation measures.
According to Council on Energy, Environment and Water (CEEW): “India’s regulatory architecture should become increasingly oriented towards attracting green capital and greening the financial ecosystem overall”.
“These include maintaining the sanctity of tenders or the power purchase agreements signed with developers but also about green taxonomy, defining green bonds, more disclosures of climate risks, etc.”
Through these liberating attempts, we can indicate the investors worldwide that our market is inclined to the climate change requirements, with an aim to attract the institutional as well as private capital into sustainable infrastructure.
Government of India hopes to create a ‘green city’ in every state of the country which will be powered by renewable energy: harboring the solar rooftop systems on all of its houses, solar parks on the city’s periphery, waste to energy systems and even electric vehicle-fueled public transport systems.
Private firms yielding profits for long now, can help nourish this infant sector.
GoI can ensure this through stringent Corporate Social Responsibility (CSR) guidelines, diverting money for preserving the primitive source of the services we exploit to generate profits.
For all this to be achieved, the time is right to trigger investments. None of this will be possible without appropriate funding and underachievement is derogatory for human survival.