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Renewable Energy Policy to provide for RGOs, says Goyal

February 17: The new Renewal Energy Policy, to be enacted soon, will have provisions for Renewable Generation Obligation (RGO) and non-compliance with the Renewal Purchase Obligation (RPO) will draw penalties, Minister of State for Coal, Power and New & Renewable Energy Piyush Goyal has said.

Speaking at a conference on “Financing Renewable Energy – Success Strategies”, Goyal said the cost of renewables, except for small hydro projects, has come down drastically over the last decade.

“There is a need to socialise the cost of renewable energy (RE) through participation of all states because, currently, only the states pushing for RE are bearing the burden,” he said.

Arvind Subramanian, India’s Chief Economic Advisor, who was chairing a session at the conference, said the role of public sector financing will assume paramount importance if India is to expand its renewable energy footprint in power generation over the next decade.

He also pointed out that while focusing on renewable energy is desirable, it could not be done without simultaneously greening of coal, which will remain the primary source of energy for the near future.

“For the foreseeable future, India is going to be reliant on coal. It’s a fact of life and we should understand that. In that case, if we are to make progress on climate change and health, unless coal is made cleaner and greener, the arithmetic just won’t add up. We should not lose sight in the middle of this discussion on renewable energy on the major investments that need to be made in greening coal,” Subramanian said.

He also stressed on the need to look at the possibility of making power purchase agreements (PPAs) in states bankable.

Speaking at the same conference, State Bank of India Chairperson Arundhati Bhattacharya, while pointing at the persisting problems in financing renewable energy projects, stressed on the need for persistent policies and the need to address issues in land acquisition, off-taking and management of the developers.

Naina Lal Kidwai, Chief Executive Officer & Country Head, HSBC India, highlighted the role capital markets could play in helping the renewable energy sector.

“Particularly, we need to create a domestic Green bond market which did trading worldwide worth $34 billion last year. India needs to participate and I also believe that priority sector lending should include renewables and better credit enhancement techniques,” she said.

Patricia Loui, Member, Board of Directors, US EXIM Bank, said, “The US EXIM Bank’s total exposure amounts to $7.2 billion dollars in the renewable energy sector and India ranks second in total exposures after Mexico. Our portfolio in India has been growing due to a convergence of interests. The US government has given us a mandate to lend which allowed us early leadership in financing projects in Gujarat and Rajasthan, which became a catalyst for other digital investments.”

She also emphasised on the need for a basic template for PPA that would be applicable to all states.