“Favourable foreign investment policies and active government support in the form of incentive are sending positive signals to the market,” UB Reddy, Managing Director, Enerfra Projects (India) Pvt Ltd
India is being hailed as an emerging economic superpower with its GDP growth rate of about 7-8 per cent per annum, when the world economy is in downward trend. To sustain this growth rate for the next 10 years, it will need to quadruple its power generating capacity.
However, according to UB Reddy, Managing Director, Enerfra Projects (India) Pvt Ltd, the country is witnessing several challenges or roadblocks in addressing the energy challenges such as:
Depleting Coal resources due to land constraints, poor resource quality and poor economics
Large dependence on imported coal, which intern increases production cost
Poor financial position of off takers (discoms or utilities)
Transmission constraints and poor distribution network.
Positive signalsIndia’s power sector needs several policy interventions and a holistic approach to solve the current power crisis. While the government is trying to improve the generation from the conventional sources by auctioning coal reserves, the recent announcements to boost the renewable energy sector exemplify the government’s efforts to improve the power situation, Reddy observes.
Further he adds, “Given the scale of business available and quality of resources, there has been growing interest from global firms and are actively looking for opportunities to invest in India.”The current policy and regulatory framework offers the promising market models for overseas investor. The preferential tariff, long term Power Purchase Agreement (PPA) and preferential treatment for RE sources of energy have been major driving factors. “Favourable foreign investment policies and active government support in the form of incentive are sending positive signals to the market,” acknowledges Reddy.
Promoting RE While the central government has set high targets to generate power through RE sector, the state governments should also take similar interest in promoting the RE sector in respective states.
According to Reddy, some of the key issues that need immediate attention are:
Policy consistency in all RE potential state.
De-bottling of allotments and blocking of sites.
Relaxation in land acquisition processes for RE projects.
Development of grid access across RE potential regions.
Improve financial position of off takers (discoms and utilities).
Harnessing natural resourcesIn order to sustain the growth of the sector and realise the RE potential in the country, Reddy suggests, government has to provide long term visibility to the investors, in terms of:
Provide long term visibility and consistent policy.
Improve business environment – reduce number of procedures and approvals; make all approvals time bound and nondiscretionary.
Development of Green Energy corridor to transmit clean energy from the country’s leading renewable power states to those with high electricity demands.
To improve financial position of discoms and utilities.