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Make in India logo with a backdrop of solar panels (Source)

Clean Power

India To Formulate A “Renewable Energy Act” To Attract More Capital

India has been taking notes from Germany to achieve its mega renewable energy targets. This can be seen from the push rooftop solar has been receiving, and also discussions to introduce a fixed feed-in tariff for utility-scale solar power. But there’s more.

Make in India logo with a backdrop of solar panels (Source)

Renewable Energy is one of the major sectors under the Make in India program (Source: Make In India)

Mr. Upendra Tripathy (Secretary, Indian Ministry of New and Renewable Energy) recently spilled the beans at a press conference that a Renewable Energy Act or a National Renewable Energy Policy is in the making. It is expected to be ready and perhaps in place by February next year before India organises its first Renewable Energy Global Investors Meet and Expo (RE-INVEST).

The German Renewable Energy Act, from which this Act might draw upon, came into force during 2000 and provided a major impetus to growth of renewable energies in Germany. Currently, 60 countries across the globe have a law in force to promote renewable energy.

Until now, all renewable energy activities in India have been carried under what is known as the Electricity Act 2003. While it played a tremendous role in transforming the Indian power sector, it was set in a different era, at a time when renewable energy was not so prominent.

The introduction of Electricity Act had allowed for easier generation, transmission, and distribution of centralized non-intermittent sources of power. At the time of its launch, concepts of two-way flow of electricity, distributed small-scale rooftop solar systems, etc. were not really important at a national level in India.

Over the last decade, renewable energy in India has witnessed mixed growth. While solar has grown rapidly in the recent years, wind energy capacity additions have suffered some setbacks or plateaued at best. Biomass and small hydro have, on the other hand, not seen much action. A major reason for this has reportedly been the lack of a focused renewable energy policy, and expectedly, this has hindered the flow of capital. The solar sector alone requires an investment of $40 billion, while it has been getting a mere $6 billion.

The proposed Renewable Energy Act will not only help in streamlining many aspects of renewable energy, like power generation, supply and tariff, grid usage, etc., but also help attract much-required capital investment. It would boost investors confidence by presenting a vision rather than just targets which are set in a project mode.

India already allows 100% Foreign Direct Investment under the automatic route (does not require prior approval) for investments in renewable energy. So the arrival of the Act should act like a catalyst for flow of capital in India.

To deviate a little from the topic, India has been trying hard to facilitate inexpensive capital for the renewable (predominantly solar) sector — this was an important part of Modi’s agenda when he visited the United States a month back. Also, discussions are in progress with the German development bank KfW to secure a loan exclusively for rooftops.

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Written By

is a Fellow with The Energy and Resources Institute (TERI, New Delhi). He tweets at @indiasolarpost. Views and opinion if any, are his own.


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