India’s message on renewable energy has a strong solar power bias, which relies heavily on innovative solutions that work not only for the country but can eventually be replicated the world over. The launch of the Solar Alliance at the Paris Climate Change Summit is just one step towards taking the global lead in this sector.
India has set itself an ambitious target of 100 GW of solar energy by 2022 and, at the same time, made it easier for foreign investors to operate in the sector with 100 per cent foreign direct investment (FDI).
Vivek Pathak, regional director for the Asia Pacific region for the International Finance Corporation (IFC) – which itself has plugged into this fast-growing sector by making steady investments in private sector companies setting up sustainable renewable energy projects – writes in the latest edition of the ‘India Investment Journal’ that the results are visible with international players’ moving in.
“The Indian government has commitment to provide 24X7 electricity to all citizens over the next five years and achieve 40 per cent non-fossil based energy by 2030 – specific targets have been set – that are likely to provide a boost to wind and solar projects as they can be implemented in shorter time-frames. Coal-based power generation projects take about three years to go on-stream, while hydropower projects can take up to seven years to materialise. Wind projects can be completed in a year and solar, even faster,” he explains.
Beyond meeting its own crucial energy needs, the country does have a much wider role to play in combatting climate change by working towards better and more accessible renewable energy sources. Towards this end, Prime Minister Narendra Modi made the bold announcement from the “sons and daughters of the sun” last December to set up a global Solar Alliance, bringing together 121 nations of the world.
Pathak hails this worldwide lead sought by India as achievable as long as some surmountable challenges are overcome in the coming years.
He explains: “For a sustainable solar economy to be in place, India will need to deliver on the utility-scale, distributed and off-grid solar promise.”
To meet the 2022 targets, at least $100 billion is needed in new investments in renewable energy projects (excluding another $130 billion in conventional generation, transmission, distribution and energy efficiency).
Mobilising additional investors from around the world and incentivising foreign investors to support large-scale investment opportunities is crucial.
India also needs a supportive framework with adequate fiscal and/or regulatory incentives to move the renewable market toward a mature self-replicating phase.
The financial health of distribution companies, the pillars of India’s electricity sector, needs to be addressed urgently.
Private sector can contribute significantly in partnering the government in both expanding energy access and job creation.
“By playing a leadership role in promoting cleaner production, achieving energy efficiency, and building scale, India can champion climate-friendly business models and help build a sustainable possibility,” he concludes.