Prime Minister Narendra Modi, sworn in for a third successive term on June 10, is likely to continue the push for renewable energy even as his government tries to balance India’s energy security and emission commitments, experts and industry players have said.
RK Singh, who as the minister for power and new and renewable energy led the clean-energy push, lost the recently concluded Lok Sabha elections. His replacement is not known as portfolios are yet to be allocated to the 71-member council of ministers who took the oath of office along with Modi.
"Last year, the government said that we have to add a capacity of 50 gigawatt of renewable energy every year. We are quite confident that there will be continuity even with the changes within the government with the percentage held by coalition partners changing,” JSW Energy chief executive officer and joint managing director Sharad Mahendra told Moneycontrol in an interview on June 10.
In its previous term, the Centre said it aimed to achieve 50 percent cumulative installed power generation capacity from non-fossil fuel sources by 2030. India will have to add about 50 GW of renewable energy capacity annually over the next five years, beginning 2024, to meet the ambitious target.
So far, India’s best performance has been 15 GW a year.
Coalition politics may not hurt plans
Industry insiders and experts are hopeful that under the new government, where BJP’s allies will have a much greater say, climate-change measures will remain a priority and the policy push towards renewable power would continue across the value chain.
They also expect the government to support decarbonising of heavy industries.
It's too early to say anything decisive but policies in the renewable energy sector should continue, Vikram V, Vice President & Co-Group Head, Corporate Ratings at ICRA, said.
“There may not be much resistance from the coalition partners in the new government on the policies for renewable energy, given the importance of moving towards sustainable sources of energy and also as the energy is being sourced at a competitive cost,” he said.
Unlike other issues where the government may face challenges in getting all NDA partners on board, it would be easier to arrive at a consensus on renewable energy policies, as most other parties, including the opposition Congress, give it top billing.
Mind the gaps
While the renewable energy sector has grown manifold in the previous two NDA terms, there are significant gaps that need to be filled to build generation and evacuation capacities and financing.
According to the draft National Electricity Policy, the estimated fund requirement for solar and wind projects during 2022-2032 is Rs 20.67 lakh crore.
The industry is hopeful that the government will support it with an increase in the capital expenditure for the new and renewable energy segment in its full budget for 2024-25, expected in July.
One big announcement ahead of the election was PM Surya Ghar: Muft Bijli Yojana rooftop solar scheme with an outlay of Rs 75,021 crore.
“The rooftop solar programme is one of the biggest announcements in the power sector; other than that, there has not been any big-bang reform,” Suman Chowdhury, chief economist and head of research, Acuite Ratings & Research, said. “But what the previous government has done is they have consistently taken measures to incentivise higher efficiency of state discoms. They have issued several grants and financial support for improvement in efficiencies as many discoms incur losses.”
Chowdhury, like other experts, said much of the growth in the renewable sector would be tied to resolving the pain points in the power-distribution sector.
“There is definitely a need for consistent reforms in power distribution, which is controlled by the state government. In my opinion, this will continue as there is no option because this has severe implications for the consolidated fiscal deficit of India,” Chowdhury said.
While the government will have to prioritise power-sector reforms, which will need the support from states, all eyes will be on Delhi for more incentives for large-scale battery storage systems, green hydrogen and manufacturing for the renewable energy sector.
(With inputs from Shubhangi Mathur and Aishwarya Nair)
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