India must increase financial support for renewable energy to meet targets for Aatmanirbhar Bharat
COVID-19 has demonstrated how disruptions in one part of the supply chain can affect the supply of components and the completion of projects. As governments around the world implement unprecedented policies to help stimulate economic recovery, the need for government support in the energy transition is greater than ever.
Renewable energies are increasingly attractive to meet the energy needs of different industries due to their decreasing costs, increased efficiency and reliability. However, these technologies are still in their infancy in terms of technological maturity and cost competitiveness, and they face several market-related, economic and social obstacles.
Why grants are important
Subsidies in the energy sector can help spark positive change by helping consumers afford modern energy, reducing the costs of new technologies and encouraging investors to take risks in new markets.
A fundamental shift in the country’s approach to energy production and consumption is needed to meet the goals of empowering India and achieving a Aatmanirbhar Bharat in this clean energy transition.
The idea of financial support may seem controversial, but it is essential if India is to meet its massive renewable energy target of 2030 while meeting its growing demand for (clean) electricity.
Subsidies come at a cost, of course, but they also offer enormous possibilities. Without them solar would not be as accessible as it is today, even more than fossil fuels or coal-fired power plants or wind turbines, solar projects depend on grants to become viable investments for developers.
So why are government grants needed? In short: the financial risk. Solar technology has improved dramatically over time, but any investment in new technology always comes with risks: it takes time to learn how to build these systems efficiently and at a price low enough to compete with the sources of solar energy. traditional fuels like coal and gas.
Why solar among all renewable energies
India plans to install around 450 GW of renewable electricity by 2030. Solar power will provide 280 GW (over 60 percent). This will require a massive addition of 25 GW of installed capacity per year. Additionally, solar power has proven to be cost effective in many applications.
On a large scale, it helps reduce emissions from power plants. On a small scale, it can save individuals a considerable amount of money on their monthly utility bills by eliminating or reducing their dependence on fossil fuels.
A combination of these factors makes solar energy an attractive choice among many countries. However, even after that, government support for the renewable energy sector wanes.
A recent report from IISD and CEEW, Mapping India’s Energy Subsidies 2021, shows that government support for the clean energy sector has declined by almost 45% since its peak in (fiscal year) 2017.
Ref. : IISD and CEEW Report Mapping India’s Energy Subsidies 2021
The report explains why renewables subsidies have stalled, due to factors such as grid-wide market parity between solar and wind power, a phased roll-out of solar power, and solar power programs. grants are coming to an end.
As part of the country’s National Solar Mission, the first big wave of subsidies has ended, but the report recommends that the government continue to provide financial support to the sector.
This second generation support for clean energy is crucial if India is to meet its target of 450 GW of renewable energy by 2030.
Why Aatmanirbharta (autonomy) is essential for the solar transition
India’s solar industry relies heavily on imported solar cells, modules and inverters. Additionally, India does not produce or refine many minerals that are used in solar modules, batteries, or other renewable energy systems.
As part of its attempt to increase domestic manufacturing, the government has increased tariffs on imports, among other measures. However, the domestic manufacture of modules is not sufficient to meet demand.
Over the next few years, India will need to import billions of dollars in solar modules to meet this huge target of 25 GW each year. A long-term comprehensive policy to address these gaps is therefore imperative for India to steer its clean energy plans away from the threat of pandemics (like COVID-19 in 2021-2021) or geopolitical conflicts (a disagreement with China).
The government could also provide some leverage to solar power manufacturers by supporting their required large investments in new technology development capabilities or initiatives.
A second generation of essential support for clean energies
The first generation of grants started in 2009 under the Jawaharlal Nehru National Solar Mission (JNNSM) in India, all designed to reduce the costs of the solar system to be competitive with other power generation technologies. based on fossil fuels. These support measures have succeeded in bringing solar and onshore wind energy to market parity and placing renewable energies at the heart of India’s energy system.
Having set the target of 450 GW of renewable energy by 2030 and knowing the significant amount of renewable energy that must be deployed each year to achieve this goal, a strategy for the next generation of support is needed, with ambition proportionate and strategic planning to meet the challenges.
For India to achieve its goals of Aatmanirbhar Bharat and the clean energy transition after COVID-19, it must increase financial support for renewable energies.
The report of IISD and CEEW strongly recommended that the government, as part of its flagship program Aatmanirbhar Bharat (Self-sufficient India) should develop more suitable subsidies for the center and the states, and should prioritize the integrated manufacturing of photovoltaic solar panels, electric vehicles and storage solutions in a wider green industrial policy.
Emerging technologies such as grid integration and energy storage, decentralized renewables, green hydrogen and offshore wind energy should be identified, developed and implemented.
PSUs in India invest heavily in the energy sector every year. The government should give a mandate for clean energy to PSUs. PSUs could play an important role in forming the basis of this manufacturing wave, ensuring investor confidence.
In addition, resolving DISCOM’s tax issues is extremely crucial to ensure compliance with long-term power purchase agreements and attract new investors.
Now is the time for the next generation of supporting measures (financial and non-financial) above to accelerate the clean energy transition and meet India’s 2030 targets to tackle climate change.
(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)