Renewable source of energy can provide more power in much less cost than new coal-powered power plants in India, and it costs more to run 62 percent of the country's coal capacity than to build new renewable power generation facilities, according to a new study.
The study titled 'Navigating the economic and financial risks in the last years of coal power' by financial think tank Carbon Tracker, states that phasing out coal power would benefit consumers and taxpayers because India is a regulated market where state support keeps uneconomic plants profitable.
The government has set itself an ambitious target of installing 175 gigawatts of renewable energy by 2022.
Since 2013, the renewable capacity in the country has grown more than 80 percent, currently standing at 70,000 MW. So, what exactly will it take the government to achieve its vision 2022?
Tariff cap at auctions, lack of standard guidelines for the bidding process, lack of strong law to ensure that discoms (electricity distribution companies of India) do not violate power purchase agreements are some of the issues plaguing the sector. The Confederation of Indian Industries has come out with its recommendations on how these issues and a host of others can be tackled.
Rahul Munjal, managing director, Hero Future Energies; Sumant Sinha, founder chairman and CEO, Renew Powe; Ashish Khanna, MD and CEO, Tata Power Solar; and Pratik Agarwal, group CEO, Sterlite Power Transmission, discuss the future of renewable energy.
Sumant Sinha said, “We are doing reasonably okay. I think we made a lot of progress in the last several years. The government was very ambitious and gusty in consensus about setting the target of 175 gigawatts."
The government has made substantial progress against that target and today, 70 gigawatts of renewable energy is installed and commissioned, Sinha said.
"We have another about 15 gigawatts that have been auctioned, so about 85, we are half the way towards our target," Sinha added.
On auctions that are going on, Rahul Munjal said the fall in tariff to 2.44 from 5 was great because at low tariffs solar and wind energy becomes mainstream and everybody wants to buy it.
"Suddenly, the government capped it at that. At the same time, the interest rates went up, rupee depreciated to wherever it is now and we got safeguard duty for 30 percent," he said.
All that put, a project which was done eight months back is very different than a project we are bidding out today at 2.44, Munjal said, adding that the cap that the government put is not good for the industry at all.
Ashish Khanna said, “There is a more reason to be optimistic, we are looking at the last 3-4 years and if we take a step back then the next 3-4 years of the power sector look different for several reasons."
If we look at the power consumption growth in the month of October some states have grown at 30 percent this hasn’t happened in the last 2 or 3 years, Khanna said, adding that when the sector is improving and more power consumption is happening, it opens up doors for everybody in the sector.
"The last 3 years were definitely bad years for the sector and that is changing almost dramatically in the last few months,” he added.Pratik Agarwal said, “The industry is looking for a feed-in tariff which can be given or there is a reverse auction process which can go across. I think the calculation of the cap and using it to have further lowering the tariff is a system which has been utilised by the government which is working so far."