Changes in Policy Will Encourage Wider Adoption of Renewable Energy by Companies

Chiranjeev Saluja Mar 09, 2021

The adoption of renewable energy in India has seen remarkable growth so far but it is at an inflection point that needs further acceptance by a larger audience. In a bid to achieve India's renewable energy target of 175 GW by 2022, Finance Minister Nirmala Sitharaman has laid major emphasis on clean energy in her Budget speech. Allocating additional capital infusion of ₹1,000 crores to Solar Energy Corporation of India (SECI) and ₹1,500 crores to the Indian Renewable Energy Development Agency (IREDA) will give a boost to the non-conventional energy sector. To encourage solar manufacturers, she announced a customs duty hike on solar inverters, which was raised from 5% to 20%, and on solar lanterns from 5% to 15%. The hike was a welcome announcement as these are necessary steps to promote the Government. of India’s Atmanirbhar program and push Indian manufacturers to become competitive in the quest to enable India in becoming a global player in the supply of solar lanterns and inverters.

While the Union Budget 2021-2022 witnessed some wins, there were a few misses too. Such as the capped net metering of 10KW which is likely to impact 70% of the rooftop solar business. Moreover, on the GST front, there has been no significant action, from being capped at 5% which if rationalized, had the potential to generate revenue for the government, and aid private players alike.

For India’s renewable energy sector to keep powering ahead, a host of issues will have to be addressed, both at the policy level and through technology-based interventions that focus on the unique nature of renewable energy sources. Let us look at some steps that could encourage growth in the renewable energy sector:

The government must ensure a stable policy framework on renewables that is followed both at the center and the state levels. This includes enforcing the amendments in the Electricity Act of 2003, privatization of T&D systems, and continued higher allocations of funds to upgrade both inter-state and intra-state transmission networks.
Opportunities must be created in Industrial & Commercial rooftop and open access projects by amending and relaxing policies on net metering by completely withdrawing restrictions.
With regards to open access projects, the government should immediately phase-out and remove cross-subsidy charges, transmission surcharge, and other applicable charges while striving to provide a single-window system for timely approvals for such projects.
Storage has been proven to be a crucial yet untapped piece in the growth of renewable energy around the world, and India is no exception. More rigorous enforcement of the renewable purchase obligation (RPO) mechanism in achieving RTC power will provide the much-needed push for storage systems as well as solar asset management to grow in the country.

The government should promote renewable-solar integrated Battery Energy Storage Systems (BESS) by leveraging regulatory and fiscal incentives to store and stabilize power. They can also help in the curtailment of renewable energy and in the growth of microgrid or off-grid projects.

India’s path to self-reliance through the Atmanirbhar Bharat route can be best realized by fostering innovation and R&D in the renewable energy space. The build-up of tangible business potential which supports such manufacturing volume will also take time before results are seen, but all stakeholders need to take their first steps by ensuring the economic viability of future projects and addressing policy pain points will be vital to sustaining this momentum, to position India as a global hub in renewable energy.