Bridge India

Weekly Update: The new government is making all the right noises about renewable energy

India’s solar sector has been grossly underperforming vis-à-vis other countries as well as the potential for the energy source in the country. The wish list for the sector broadly comprises the following – strengthening of RPO mechanism, regulations to facilitate distributed generation, promotion of domestic manufacturing, rural electrification and availability of cheaper finance. It is very encouraging to note various positive signals coming out of the new government on all these fronts and some of the thematic messages coming out about future role of solar power in the country.

  • In the President’s address it was announced that the National Solar Mission will be expanded
  • Narendra Taneja stated that India will closely look at the ‘Chinese model’ when devising its renewable energy policy
  • The only dampener in the solar sector in India today is the possible imposition of the anti-dumping duties

Indeed, the new Prime Minister, Narendra Modi, speaking at an event on Sunday (8th June 2014) has highlighted the need to bring about a ‘saffron revolution’ focused on solar energy (refer). According to him, the focus needs to be on skill, scale and speed to revive India’s growth story. In the President’s address yesterday (9thJune 2014), that highlighted the new government’s roadmap, it was announced that the National Solar Mission will be expanded.

Last Friday (6th June 2014), the new Power Minister, Piyush Goyal, touched upon two key aspects – he said that the new government might amend and expand the scope of the Electricity Act to push for higher utilization of renewable energy by changing the scope of RPO obligations and also use relevant amendments to fast-track rural electrification projects using solar (refer). Over the past month, BJP’s energy convener, Narendra Taneja, has repeatedly been saying on various platforms that solar power can play a ‘transformational role’ in rural electrification efforts under the new government (refer). He recently also said that India will be looking closely at the ‘Chinese model’ when devising our renewable energy policy covering both equipment manufacturing and power generation (refer).

Solar is a capital intensive sector and the cost of finance has major impact on the project feasibility. In that context, the sector has been demanding access to cheaper and preferential finance. A favorable government move on this front can go a long way in improving competitiveness of the Indian solar industry in relation to conventional power as well as to foreign competition.

BRIDGE TO INDIA views all these comments as being extremely positive for the sector and we can already see a noticeable improvement in sector sentiment as compared to just a month ago.

The only dampener in the solar sector in India today is the possible imposition of anti-dumping duties. BRIDGE TO INDIA has consistently maintained that the new government needs to do away with these duties and instead provide a comprehensive, long-term plan to promote competitive domestic manufacturing. If anti-dumping duties are revoked and some of the positive sound bites get converted into actions, we can almost guarantee that ‘acche din aane waale hain’ (good days are about to come) for the solar sector in India.

Jasmeet Khurana is a consultant at BRIDGE TO INDIA.