In India’s pursuit of 500 GW of renewable energy capacity by 2030, the adoption of Green Open Access rules by all state governments is an immediate necessity. The industry has welcomed with open arms the Government of India’s steps for notifying the Electricity (Promotion of Renewable Energy through Green Open Access) rules 2022, however, if or not the states adopt a similar approach shall determine its success. The process of new capacity installation has slowed down over the past couple of years due to various factors such as pandemic-induced disruption in supply and a rise in material cost. As the initial costs rise, investors need a better assurance of return and open access thus becomes imperative to achieve 25–30 GW of renewable energy capacity expansion each year.
India is aiming to achieve the 500 GW target by 2030, in its continued efforts toward a cleaner and sustainable environment. However, many say it’s a big goal post placed too far. No one knows whether we will hit the target or not. In this line, at least there is a big motivation and clarity that huge investments are needed in the industry and the installation pace has to be increased. Given, globally India is emerging as a superpower, the reliance on the indigenous source of power needs to be assured. Added to it the global pressure of meeting carbon emission commitments, achievement of the 500 GW target needs to be ensured.
In an interview, Power and New & Renewable Energy Minister Sh. RK Singh stated that India will reach 50% clean energy share and 500 GW RE capacity targets before the 2030 deadline, which has made many headlines in the industry. To achieve this goal, the Central Government is taking significant steps, including notifying the Electricity (Promotion of Renewable Energy through Green Open Access) Rules 2022 or Green Open Access Rules. This move will boost energy initiatives to achieve the 500 GW target by 2030. The industry welcomes this step with open arms and calls it the biggest policy step for the sector. However, the following are the critical steps that can be taken up by India Inc to achieve the 2030 target.
Major challenges in the sector:-
The last 2 years have seen a decline in the growth of new installations in the country. It is an alarm. The costs have increased, new tenders have dried up and over that, the material shortages have crippled the pace with which new installations are slated to happen. To mitigate the challenges, the Green Open Access policy, waiver of transmission charges for renewables, opening up of futures trading of electricity, bilateral trade of RECs, and many other welcome steps have been taken up.
Regularising Discom’s interference in the Bilateral Agreements of power purchase: –
The industry has suffered a lot from the argument that green power is harmful to the health of utilities. Considering the fact that even after the strong resilience of Discoms and with all the filters in capacity addition, Discom’s health has kept on deteriorating without any checks and balances. The time has come that industrial consumers are given free hand to decide whom they want to purchase the power. The time has come to let Discoms just monetize its infrastructure and not interfere further. They need to level the playing field so that consumers get access to cheap and clean power and the country’s money is not wasted on someone’s inefficiency.
The clarity in the policy framework by Central Govt:-
While the recent Government policy and steps will prove to be a milestone in the mid to long term, it is very important that all the promises made are implemented. So that the investments can be planned fruitfully. For example, the waiver of transmission charges on the CTU network is yet to be regulated, the creation of a Centralised portal for all approvals needs to be ensured, and even more important, adherence to the same is to be done by all the states.
To conclude, while the challenges lie ahead, super positive about the outcomes. All can feel the change in the way industrial growth is happening. The industry is one of the very few markets where the returns on renewable energy are still in double digits, yet the potential size is infinite. Quality of government is ultra-high and hence is the confidence that slowly and steadily industry is witnessing a major contribution from India inc in the fight against climate change and towards the development of renewable energy sources.
Authored by Rahul Gupta MD & CEO, Rays Experts