Renewable energy drive gets new push

Prime Minister Narendra Modi – a clean energy enthusiast - has given a little over two months time to the ministry of new and renewable energy (MNRE) to prepare a draft Renewable Energy Act. An expert committee has already begun work on the Draft Renewable Energy Act for accelerating growth in the sector that requires an investment of USD 40 billion currently.

MNRE has set the ball rolling with the hope that the Prime Minister will be able to announce the Draft Renewable Energy Act at the forthcoming Global Renewable Energy Investor Summit to be held in February 2015. An expert committee has been set up by the MNRE who is currently in the process of finalizing the draft proposal.

The draft proposes that the government may designate renewable energy as a separate sector for according priority status. To address the issue of capital constraints, the draft also proposes promoting takeout financing and refinancing of operational renewable energy projects and providing financial incentives to enable channelising capital into the sector. The draft also suggests equity contribution from NBFCs, state governments and PSUs in order to leverage debt from the capital markets. Another crucial suggestion on land allotment for renewable projects is that the central government may guide the states towards simplification of land allotment processes and provision of a single window clearance for all electricity generation project clearances.

While this is just the first draft, the expert committee has sought comments on the same and is expected to discuss the proposal on or after December 15. The NDA government’s massive solar power push will be a boon for the renewable energy sector that has been struggling with grid connectivity issues, budgetary constraints and most importantly non-compliance of Renewable Purchase Obligations (RPO) under the present Electricity Act, 2003.