An Indian Parliament committee has given recommendations for making major changes in the National Solar Mission which, it believes, are essential to achieve the 100 gigawatts of operational capacity target by March 2022.
Committee members noted that the government has taken notable measures to increase solar power capacity in the country, and the wind energy sector has prospered significantly through financial incentives. However, other renewable energy technologies like biomass, cogeneration, small hydro, and waste-to-power are way behind and need special attention from the government.
Funding for Solar Power
As per the Ministry of New & Renewable energy, an estimated Rs 5 trillion ($78 billion) would be required to achieve the 100 gigawatts of operational solar power capacity target by March 2022. The committee, however, notes that no financial program has been implemented by the Ministry of New & Renewable Energy. The government has allowed 100% foreign direct investment in the renewable energy sector, and capacity addition is nearly completely dependent on private sector investment.
The committee has recommended that the Ministry play a proactive role in arranging funding by facilitating loans with lower rates, floating green bonds through the Solar Energy Corporation of India, and approaching international lenders, including the Green Climate Fund.
Domestic Content Requirement
The committee has recommended that the Ministry should push defense establishments to set up 5 gigawatts of solar power capacity on surplus land and vacant rooftops. However, only Indian-made cells and modules can be used for this purpose. This proposal, however, may run into direct confrontation with the WTO ruling that found domestic content requirement obligation by the Indian government in violation of international trade laws. A provision that allows governments to use domestic content for their own use may come to its rescue though.
Solar Power Parks
While the implementation of solar power parks have been encouraging so far, the program design needs some tweaking, feels the committee. Infrastructure for solar power parks is being developed in parallel to implementation of the solar power projects themselves, but this does not provide certainty to the participating developers. Thus, the Ministry should expedite development of support infrastructure for solar power parks to attract more interest and investment from project developers.
Viability Gap Funding
The committee has recommended that the Ministry should abolish the viability gap funding (VGF) program, as the capital cost for solar power projects has dropped sharply over the last few months which has also resulted in a remarkable fall in tariff bids. The committee feels that the VGF program has outlived its utility and the sector no longer requires such support to flourish.
Rooftop Solar Power
The poor capacity addition in the rooftop solar power sector forced the committee members to question the viability of the 40 gigawatts of operational capacity by March 2022. The committee has recommended that the Ministry reconsiders this target, possibly revising it downward. To expedite implementation of rooftop solar power projects across the country, public awareness programs, changes in building bylaws, and financial support schemes should be implemented.
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