Policy Irregularities Block Renewable Energy Growth in India

A recent report titled ‘The Rising Sun’, published by KPMG, indicates that the solar power in India is anticipated to fulfill around 5% to 7% of its power needs by 2021-2022 and will enable the country to cut down its coal imports by more than 30%.

However, the government regulatory structure in the country is yet to acquire a solid shape. The report indicates that governments and utility companies are finding it a challenge to buy expensive solar power at nearly Rs.12 a unit when the normal power is available for Rs.3 or Rs.4.

The report indicates that clean energy producers were earlier encouraged by the 15% clean energy mix spelled out by the National Action Plan on Climate Change (NAPCC), but the ministry had subsequently brought it down to 6% and the current production hovers around 3.5% to 4%. This has created mixed opinions and confusion among solar stake holders. The new proposed plan has set an overall target of achieving 21,700 MW in the ensuing six years, thus making the total share of renewables to 41,400 MW.

The government estimates that the solar power generation will ultimately go up in India due to the anticipated reduction in power production costs. The government expects that solar power will come down to Rs.11.80 per unit in 2013-2014 and ultimately reach a level of Rs.9 per unit in 2016-2017.

The report estimates that the solar power production will cut down carbon dioxide emissions in India by 2.5%, which is only a tenth of the 20%-25% reduction the country has agreed at the international summit on climate change held at Copenhagen. The report indicates that solar power producers in India are concerned about the slow implementation of a scheme that makes it compulsory for utility firms to buy certain amount of renewable power.

Source: http://www.kpmg.com/