10/10/2019 - Renewable energy | Mainstorming

IAS Parliament 5 years

KEY POINTS

Reasons

· The capacity addition programme of the renewable power sector has slowed down since last year, prompting Crisil, a rating agency, to predict that the target is set to be missed by a huge 42 per cent.

· Unstable policies and regulatory challenges, free fall in tariffs and reneging by state governments and power distribution companies on power purchase agreements (PPAs).

· Besides, the cost-push effect of the safeguard duty levied on the imported solar equipment and depreciation of the Indian rupee against the US dollar have also added to the woes of this sector, as a result of which investors’ interest in this sector has seen a sharp dip.

· Many of the sanctioned solar projects are also facing glitches in the implementation process, resulting in inordinate delays in their execution.

· The shift from fixed tariffs to competitive bidding and the increase in the capital cost seem to have shoved the wind power sector into the doldrums.

· The trigger for the current slump in capacity addition can be traced to the refusal of some state governments and power distribution companies to honour the commitments made under the PPAs regardless of the court orders.

Measures to be taken

· Promote hybridization of solar and wind energy and build ancillary markets. This will help reduce variability in power generation. Hybrid projects would also have much higher capacity utilization factors, thus practically eliminating the intermittency challenge.

· Invest in digitalization that can optimize grid-level operations besides impacting consumer behaviour.

· Approaching WTO in a diplomatic manner to solve the solar panel issue with USA.

· Turnaround the distribution companies, immediate reforms are needed to revitalize the discoms – privatization and greater autonomy will be the answer. There is a dire need to invest in upgraded infrastructure and to formulate an action plan to enhance revenue collection.