Government Spots Constraints On Renewable Energy Projects

Moderator
By Moderator July 22, 2019 12:26

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The renewable energy projects target for 2019-20 is 11.8 GW. But we are 800 MW short of our quarterly target even in the first quarter of 2019-20.

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  • The 175-gigawatt target for 2022 requires us to install another 95 GW of a renewable energy project in the next two years.
  • A modest share of this capacity has been tendered and/ or is in the process of commissioning. However, there is a considerable chunk where tenders were canceled or postponed and a larger chunk that remains to be tendered.
  • Land constraints, insufficient transmission facility and DISCOM defaults on payments are the leading impediments to renewable energy project adoption in the country. This has been unanimously agreed upon by both the industry and government stakeholders.
  • To address these bottlenecks, the government recently introduced certain measures, as it is aware of its commitments under the intended nationally determined contributions (INDCs).

Modifications in solar parks’ scheme

  • On July 12, 2019, the government introduced two sets of modifications in the scheme for development of solar parks.
  • The first modification is primarily aimed at Central Public-Sector Unit (CPSU) and private entities who own land. The definition of “own land” has been expanded to include land taken from various state or central governments or their entities or PSUs on the lease or on right to use basis.
  • The second applies to capacity tendered via Solar Energy Corporation of India (SECI).
    • SECI is made responsible:
      • For making the land available to the successful bidder
      • For ensuring the development of external power evacuation infrastructure by the relevant development agency; and
      • For maintaining a payment security fund (PSF) for a renewable energy project park against DISCOM default.
    • Assigning the responsibility to the primary off-taker is an attempt to reduce the risk to the project developer. However, the project developer must monetarily compensate for all the above.
    • States that facilitate the land for projects are awarded a facilitation charge of Rs 0.02 per unit, paid by the developer.
      • The developer must remunerate the external transmission system development agency to the tune of 40 percent of the cost of the infrastructure.
      • And, the developer will feed into the PSF at a rate of Rs 0.02 per unit.
      • All these additional charges will be included in the bids released henceforth.
    • Further, the modifications do not allow the government-provided central financial assistance (CFA) to be utilized for land procurement or for internal evacuation infrastructure (ie, evacuation infrastructure from the power plant till the closest substation).
      • The government is certain that despite the industry’s struggles, the technology is cost-competitive and industry does not require financial support.
      • Therefore, the need is to prioritize public infrastructure. The existing provision of CFA for evacuation infrastructure (both internal and external) development will now be exclusively used for external power infrastructure, according to the modifications.

Approval for transmission systems 

  • The ministry of new and renewable energy (MNRE) headed by RK Singh, on July 18, 2019, approved a proposal that called for early regulatory approval by central electricity regulatory commission (CERC) for renewable energy-linked transmission system worth 66.5 GW.
  • The identified transmission capacity is split into two — 28 GW under Phase-I and around 38.5 GW under Phase-II.
  • Transmission networks, in comparison to renewable energy projects, are associated with much larger gestation periods. Pre-approvals could go a long way in kickstarting projects necessary for the large renewable energy project that is expected to come online in the immediate future.

Conclusion

  • At 80 GW today, the Indian story was built on the back of a solid policy foundation. Tweaking the policy to stay relevant has been the primary driver of the growth.
  • There is no doubt that government stakeholders are heavily leaning towards renewable energy project expansion. The latest measures are sound steps, but it remains to be seen if their application will have any impact, to write home about.

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Moderator
By Moderator July 22, 2019 12:26