Govt Providing Cheap Funds To Domestic Banks from Multilateral and Bilateral Funding Agencies to Promote Solar Power Projects in India: Upendra Tripathy

Govt Providing Cheap Funds To Domestic Banks from Multilateral and Bilateral Funding Agencies to Promote Solar Power Projects in India: Upendra Tripathy

India has perhaps for the first time set the most ambitious targets for renewable power generation, which is to add 175 GW of solar and wind power put together. New funding avenues are being explored, policies are underway to promote domestic manufacturing of raw materials for solar plants and connect with the renewable rich countries is being established under various umbrellas. The International Solar alliance was one such initiative and come September, India will be signing a formal treaty with these countries to promote green power generation. Multilateral and bilateral funding agencies have started looking at India for supporting solar and wind projects.

This is one of the most recent and exhaustive Interviews of Secretary MNRE, Upendra Tripathy to Anupama Airy, Editor and Founder of EnergyInfraPost.com.

Excerpts:

Q: How is the solar power capacity fairing in India and how do you react to the ongoing concerns of domestic solar manufacturing industry?

A: The manufacturers have expressed some constraints with expansion of demand and that they should be able to sell. We are addressing these issues. We have already done 7000 mw of solar power capacity addition and a much bigger capacity is underway. What has happened is that solar parks (where all clearances are in place, there are no land issues, comes with centralised services and connectivity) have attracted a lot of people from outside. So in these 33 solar parks that we did and the 20,000 mw more that we are proposing to bring in for solar parks has actually brought in the world’s attention. The second thing is the Re-Invest 2015 that we did that brought together number of countries, companies, investors, banks from all spheres. So these two things—the Solar Parks Policy and Re-Invest 2015, have Renewables in a different footing. There are more people to bid, there is more money coming in. Companies with top class talent and technology are coming. Even if you look at the present tariff of Rs 4.34 a unit, there were many bidders in each area.

Q: Presently, we have producers (coal essentially) backing down production with less demand. No new announcements are being announced by private players due to less demand. However, on the Renewables side we have plans to add 175 GW capacity. Hope this planning, in light of the low demand, will not go wrong? 

A: Solar power generation should not be compared with other forms of power like thermal. You must understand that solar power generation is irrespective of its cost. This is being done so that say 20 years down the line, all our coastal cities are not getting drowned. We are doing solar to see that the carbon load comes down. So I would say it’s a matter of faith and every one mega-watt of solar that you produce, you save the lives of two people…who would not die of air pollution, it removes 50 vehicles from the road and then it makes lives of our future generations better. So solar power cannot be simply compared in terms of cost with other forms of power. And that is why there is a Renewable Purchase obligation, which is conscious decision as to how much of renewable energy generation we should be doing to keep the atmosphere, the environment safe and bring down the global warming levels. So, whatever is the cost, we must and we should buy that percentage, which is 8% for solar. So out of our total energy consumption, 8% has to be solar and in line with what has been cleared by the Cabinet, this percentage would go up by 1% every year. So we have a roadmap as per which, irrespective of the cost, this has to be done. While the cost of solar has come down, we are also trying to bring the cost of wind power down.

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Q: Presently, India does not have a policy on the right energy mix for its power projects. Investors and companies are seeking clarity on how much the country wants on thermal, nuclear, solar, hydel or wind to enable them to plan investments. A lack of policy here seems to be creating confusions in the minds of the investors as till yesterday the emphasis was on thermal, then came UMPPs, in between it was gas, then nuclear and now renewables. What is the appropriate energy mix that a country like India should have?

A: As to what should be the overall energy mix policy, I can’t comment on it. But am sure it is being looked into. I told you for renewable we already have a Renewable Purchase obligation which is a conscious decision. Talking of the energy mix, ideally, it should be such that you can balance all requirements. You need a base load for the country, you need a spinning reserve..and the base load has to come from reliable sources, may be coal. So the base load has to be met at any point of time. Now any fluctuation in demand or when the demand goes up can be met from solar.

Q: ….But the question is how to bring in grid stability, or how to do grid integration?

A: This is a technical issue and can be resolved…so ideally the energy mix should be such that the base load should be from a reliable source that is under our control and rest all can be managed through re-balancing, through reserves and renewable sources. Many countries today call solar as the ‘oil in the sky’…earlier oil use to be in the ground and now it is in the sky. So the importance that our government has laid on solar can be understood. 

Q: The new solar manufacturing policy to support domestic players is on the anvil. What are the issues you are addressing in this policy to enable development of solar capacities in the country and meet ambitious targets of 1 lakh mw of solar capacity addition? By when can we expect it? 

A: The policy has to go to the Cabinet and the same is under process. The policy is aimed at boosting domestic manufacturing. If you have local manufacturing, your logistics cost comes down substantially by almost one-third. We import about 70% of solar panels from China and around 13-14% from Malaysia and some other countries also. Idea is why not manufacture these here. But somehow, like our silicon chips, our computer chips..we don’t make but import them. And so we have a policy of supporting capital subsidy earlier also and they use to give 20-25% of subsidy also for any manufacturing including poly-silicon. But as of now, we are thinking of having a new model as they have in China…where you get assured procurement orders for say 4-5 years. This gives an incentive to industry to establish manufacturing. So we are thinking, if we can somehow bring in an integrated way of looking at encouraging domestic production of raw materials that go into a solar plant—silica to poly-silicon to deployment….that is the model we are coming up with, essentially we are saying that we will give you one crore for deployment i.e VGF and one crore is the ceiling—the maximum that we will give. Similarly, we will give you Rs 2 crore for putting one mega-watt of capacity for generation/manufacturing. So we will call for tenders and say this is the support of Rs 2 plus one crore and now you quote what is the minimum you need …someone will say I need Rs 1 cr, someone will ask for 0.5 cr, so the lowest ones, based on least cost to the government, we will give support for around 5,000 mw of production. In fact a beginning has already been made….one company has got American technology and government technology…they have started 1000 mw of production here. I am told Madhya Pradesh people are moving in and we will protect all of them under the policy.

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Q:The ISA led by France and India, is bringing together investors and financers in high-profile events in New Delhi, Kenya, Peru and Indonesia – countries with high solar potential in three different continents. The next investment summit is scheduled for February 2017 in New Delhi, after which it will be held in other countries. What kind of investments and interests are we looking at for India? 

A: From the ISA side, we are looking at $1000 billion of investment only for solar sector till 2030. And this is the minimum that we are looking at, it could even be more. Between 2004-14, if you see $2.4 trillion got invested in renewable energy sector (China, USA, Europe).

As of now in India if you look, the promise that we got of Rs 77,000 crore by the banks…Rs 18,000 crore has come in as investments. So we have got quiet a bit of investment and we are looking at major agencies like the World Bank, New Development Bank, Asian Infrastructure Investment Bank, other multilateral funding agencies as also bilateral funding agencies like KfW to get more and more credit not only to India but to the solar sector.

For instance for rooftop solar, we have got $500 million for SBI from World Bank, we have got $500 million from ADB to Punjab and National Bank, we have got $250 million from New Development Bank to Canara Bank and Euro One billion from KfW for our 40,000 mw roof-top solar projects. So the idea is to bring down the cost of capital, give it to companies who can pass on the benefits to the commercial and industrial sector and go in a big way for rooftop.

For the first time we have an international organisation like ISA in India. On September 30, we are planning a big ceremony in India where we will invite all the countries and a formal treaty will be signed between India and these countries this time around. All ministers/ head of states from different countries will be invited for this.

Q:  You have also mentioned about creation of the $1 billion alternate investment fund for renewables. What is the progress here?

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A: That is on the anvil. In fact we are planning to put in it a small amount of money from the Infrastructure Development Fund (as announced in the Budget) and then we propose to get some more funds from other countries. We will also leverage funds from the private sector and put together this $one billion fund, which will be an equity fund which will give preliminary equity fund support to projects.

Q: How is the progress on setting up solar projects for the Railways and Airports, as the two alone offer tremendous opportunities?

A: Airports have actually done wonders. Cochin airport has become 100% solar. Delhi has started 5 mw and put together a 139 mw generation presently covers Airports with a prospect of going upto 600 mw across the country. Then with sports ministry, we have also taken up plan to include the Stadiums with solar power generation. This the warehousing corporations, storage centres, FCI, they have been told to expedite plans to move to solar power. On 7th of this month, at a major event on renewable energy in the capital, where 45 secretaries of ministries are giving a commitment certificate to do a particular quantum of solar in their respective ministry.

Q: Solar has gained lot of momentum over the past two years of this government being in power. What are the plans on adding wind capacity in India. How are wind projects fairing in the country?

A: Wind is doing very well and 67% of our total installed capacity of renewables is wind. It continues to be the leader and so far solar (that is presently 7000 mw plus) has not overtaken wind power generation. We plan to make it more vibrant, we are planning to promote the small wind projects a bit more now and then we are also going to have 6,000 mw this year. We added maximum wind capacity in our history last year with more than 3000 mw. We are also looking at additional mechanisms to get wind power capacity faster. For the first time, we are going to look at centralised procurement of 1000 mw of wind —it will help the industry, the states. This will be done for the first time on a pilot basis.

Anupama Airy
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Anupama Airy

Founder and Editor at EnergyInfraPost
Independent Journalist and Energy Expert.​ (Worked with leading mainline financial and national daily for 23 years.​)​ Also, Guest Contributor with busines​sinsider.in
Currently, Writing a Book for Penguin India Titled Greased Pole:How Politics and Lobbying Stifled India’s Energy Dreams. The author can be reached on anupama.airy@gmail.com (9810661825)​
Anupama Airy
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