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Home » Cover Story » Emerging Opportunities In Renewable Energy

Emerging Opportunities In Renewable Energy

March 26, 2021 2:13 pm

Emerging Opportunities In Renewable Energy
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Industry experts shared their views on boosting India’s renewable energy sector with the emerging opportunities, new investments and renewed goals.
According to International Energy Agency (IEA), India will be the largest contributor to the renewables upswing in 2021. In line with the existing policy and focus on the renewable sector, the Budget reposes faith in solar by providing an additional capital infusion of ₹1,000 crore to Solar Energy Corporation of India (SECI) and ₹1,500 crore to Indian Renewable Energy Development Agency (IREDA). 
To promote domestic production and build up domestic capacity under ‘Atmanirbhar Bharat’, the government will notify a phased manufacturing plan for solar cells and solar panels. Also, there is a wide focus on Green Hydrogen Mission, which holds key to reduce the dependency on minerals and rare-earth elements.
Opportunities and challenges in renewable energy
“There are numerous opportunities, but the fact is that when you have to think for RE industry, the electrical industry and the electronics industry, all of them get benefit from it. There’s not just one industry that is quickly benefiting all of this. Even transmission infrastructure leaves much to be desired. Recently, the government of Tamil Nadu had come up with this thing for repowering. What they have very cleverly stated is that repowering can take place only if the grid is capable of taking in extra power which means, there is going to be no addition over there, says Ajay Devaraj, General Secretary, Indian Wind Power Association.
The other aspect is, we have constantly used the word green, which is something that will happen. Not only if we keep using renewable energy but also ensuring that it reaches the last person down the line at an affordable cost. You have the normal customer and you have the commercial and industrial customer. The commercial and industrial customer looks for cost reduction and that’s why they have been investing in renewable energy. 
Nithyanandam Yuvaraj Dinesh Babu, Executive Director, EY India, says, “We still have $1.5 billion as DISCOMs dues for the renewable energy sector as of January this year. We see the policies and regulations changing across the states as and when they deem fit. And there is a huge backlog of tender allocation by SECI. Therefore, the domestic financing challenges of international investor confidence have been put under a lot of stress that needs to be addressed. We have to give more opportunity to newcomers and at the same time deploy and manufacture with the upgraded technologies, rather than expanding the current capacity to showcase the GW. So, the emphasis now has to be from GW to GW hours, and I re-emphasise a level playing field for MSMEs. All these would combine and give a lot of avenues for the investors to invest in this sector.” 
Anil Saboo, President, IEEMA, explains, “Renewable energy generated by any source whether it is solar, wind or hydro – it’s not a constant source of energy as it results in fluctuations and variations. We cannot have more than 17-18 per cent renewable energy in the grid, and the balancing of the grid becomes a challenge beyond it. So, while renewable energy is delivered free of cost with least maintenance, we need to have an ideal energy mix from various sources of renewable energy as well as conventional power.”
This fairly indicates that immense opportunities are emerging out of this energy transition and the coming decade shall come out with cost-effective and sustainable solutions towards storage system as well as green hydrogen uses these to keep the momentum going on to integrate the renewable energy generation with existing grid and conventional sources, the battery storage system to be created to make it constant availability of power irrespective of generation sources.
Government’s capital infusion in RE
This is a very welcoming move in terms of capital infusion. But the two agencies are in two entirely different businesses. “One is in lending, and the other is in basically enabling. So, we must see whether the man is going to go beyond tendering. It’s not that the centralised tender is not working, but there has to be ways and means to innovate it, says Yuvaraj.
So probably SECI can use to what the reforms to go beyond their usual approach and try to create and implement innovations. They can really bring about reforms which would cater the sector’s demands and address their concerns. What we don’t want to see is the kind of topping of the PSM fund with these financial allocations, which is a straightforward way to showcase utilisation. 
But I think they should try and leverage the investment and try to achieve 7-8 times more, by enabling the sector to come forward and employ more GWs of energy to the existing capacity.
When we talk about IREDA, they have received exceptional international line of credits, grants, and other various benefits, and their responsibility has been expanded beyond lending very recently. This is because they finely manage the incentives released to the wind energy sector. Interestingly, they are looking after the solar park, after taking technical lessons from the World Bank programme promoting solar energy. So, their mandate also went beyond just lending, and ever since new leadership took over IREDA, various new products are emerging in the market to act as a working capital or aims at bridging finances. Several innovations can be seen within IREDA. So, overall, I think this is a positive move, but again, the beauty lies towards leveraging the funding, as every penny and each dollar given to institutions like SECI or IREDA shouldn’t be deployed casually. They must be invested in a way where returns are certain and higher than investments made and both the institutions must ensure that this is done in a great way. They just hope that there will be new areas for investments, innovations and finances. There are also some proofs of concepts that go beyond MNRE’s R&D mandate. 
Moreover, IREDA and SECI should see for practical SOPS and then make attempts to create additional revenues for funding on that particular aspect.
RE’s role in improving DISCOM performance
According to Anil, the DISCOMs are facing a financial crisis in several states. DISCOMs are sticking up to RE either as per their revenue model, or following their present market position. They need to embrace it positively as some DISCOMs feel it’s a loss for their financial revenue. 
The recent notification and changes in electricity rules, the benefit of net metering is restricted to residential, agricultural and district light consumers to 10 kW only, excluding the commercial, industrial and other category consumers. “This is a real big blow to the distributed solar and rooftop solar program which is targeting to have 40 GW by 2022,” To keep it short, looking at the bigger prospects, DISCOMs with the help of the Centre will have to go for renewable energy. They should consider it as a revenue generator instead of viewing it a loss maker, as net metering itself is beneficial for the consumers and India’s growth prospects. 
Key aspects that can transform RE sector 
Rajsekhar Budhavarapu, Managing Partner, ACESS Advisors LLP says, “I think, if you’re going to be liberating the renewable energy sector from just the tender business and allowing corporate PPAs to be happening, or having a different structure where you are allowing 50 MW power and other projects to be done with a feed-in tariff which could be calibrated, then the private sector will be very enthused and work on its own steam to create a profitable businesses to match and cater DISCOMs needs and it’s a distorted market in its absence. Currently, if you look at the renewable energy sector, it is very lopsidedly oriented towards companies having foreign ownership. Whether we like it or not, but think about it, we are actually excluding the MSMEs from this industry which is entirely against the national gains.” 
On one hand, we talk about being vocal for local for going global, but when it comes to renewable energy sector, we have very high threshold levels for people bidding for the SECI bids and if there are any large projects, you have economies of scale.
So, there is no provision to commence any small scale projects even if they are allowed. And whether it is rooftop project, customer-end projects, project for solutions, or corporate PPA merchants offer own development innovative projects. Secondly, we need to understand that the DISCOM needs clearly matched; there is definitely much of a capacity for modeling utilities and seeing the future demand and the current energy mix etc.
If the government needs to work for the DISCOMs or the utilities to do that, then they need to pull all the departments together in a fashion that it has no bureaucracy; but it is realistic, dynamic and true to the timing and be proactive in working. Why that game needs to go on? I think nothing is acting as a barrier for the regulatory framework to be opened up. Even something like rooftop solar is not without barriers from the institutions for the private sector to play in. This is evolving more and is turning out to be favourable with the way the discussions are happening with the reform of the electricity bill and the introduction of new private players. So we should allow private sector to play the game as it’s enshrined in the Electricity Act 2003, open access and let them design and do the projects.
Facilitating hydrogen-based energy sector in the future
According to Ajay, hydrogen can definitely be a great source of energy but then one looks at the increased emphasis that’s aimed at facilitating what needs to be done in the iron and steel industry. Using hydrogen or generating it requires splitting of water, but as we know water is a scarce resource; perhaps, if we can avail it offshore rather than having them onshore, things might work in a better way if you co-locate such things along with the offshore. Price factor is one of the key challenges here as people say that going offshore is costlier than onshore; but again if you are able to co-locate the factors, everything will fall into its place. 
Green hydrogen energy is the new kid on the block. And looking at the increasing storage requirements, “I think we should begin producing hydrogen energy. But we need to understand that 90 per cent of hydrogen production and especially the green hydrogen are largely based upon splitting water; and we all know that India is a water deficit country. So, we cannot think about onshore green hydrogen but offshore green hydrogen and must go for possible ways to produce it offshore and what will be its uses and how; we must also look for ways to transport them”, says Rajsekhar. We have niche industries where it can take off. We need to be looking at how the power production and consumption can be structured in such a way that you could have flexibility to power dispatch for commercialisation of this project. 
If you’re looking at energy storage, there are a lot of services that the batteries, the pump storage, compressed air, flywheel and gravity kind of a solutions can offer. These need to be structured in their multiple value streams and services that can be given if you are only going to be allowing forming of power and dispatching the power at a later time for meeting peak power. I don’t think that is good enough to capture the whole value of the storage system. 
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DISCOMs should consider RE as a revenue generator instead of viewing it a loss maker, as net metering itself is beneficial for them.
Anil Saboo, President, IEEMA
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Emphasis now has to be from GW to GW hours, and I re-emphasise a level playing field for MSMEs.
Nithyanandam Yuvaraj Dinesh Babu, Executive Director, EY India
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India can become an exporter as only 10 per cent of India’s total capability for turbines and wind equipments are being used.
Ajay Devaraj, Secretary General, Indian Wind Power Association
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We should allow private sector to play the game as it’s enshrined in the Electricity Act 2003, open access and let them design do the projects.
Rajsekhar Budhavarapu, Managing Partner, ACCESS Advisors LLP  
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