US pullout to brighten climate for Modi's green energy plan

NEW DELHI: US withdrawal from the Paris climate deal can potentially elevate India to a leadership role in the global fight against climate change and sharpen investor focus on the Narendra Modi government's programme to build massive renewable energy capacity.

The government is working to build 175 GW (giga watt) of renewable energy capacity by 2022, envisaging an estimated investment of $175-180 billion. The green push will not end there. The government expects non-conventional sources to account for 40% of total generation capacity by 2030.

The sheer scale of the government's programme -- the largest such scheme in the world -- offers heavy traction for investors. This has already been demonstrated in successful green Masala bond issues worth nearly half a billion dollars by coal-burning behemoth

NTPC

and IREDA, government's funding agency for renewable projects.

"India will pick up any investment slack in the US after the pullout as investors and fund managers look for a country with a solid green energy policy and commitment. This means fatter and wider sources of funding for Indian solar and other renewable energy projects," a government official said.

Other such as Raj Prabhu, CEO of US-based green energy market tracker disagrees. "The impact for India will be almost zero in the short-term. It will not have a significant impact in the short-term as the withdrawal will take approximately four years, which means the next election could decide what will happen," he told

TOI

on Saturday.

But there are yet others who feel that emerging technology and economy of scale have created enough market force to drive renewable capacity building in years to come, though coal will remain the mainstay for providing 'base load'. Solar tariffs recently dropped to Rs 2.44 per unit for a project in Rajasthan's Bhadla solar park. This is 18% lower than the average tariff of Rs 3 per unit for power from NTPC's coal-fired plants.

Simultaneously, solar module prices have continued to slide, with Chinese supplies becoming 11% cheaper than a year ago and the government announcing several incentives to promote domestic manufacturing.

Officials said such market dynamics is enough to drive growth in renewables. The government's policy focus and commitment, then, is the icing on the cake.

"With all the attention given to the solar industry, we need to recognise that electricity generated from solar makes up just 1% of the total power generated in India and there is a long way to go for India to shift from its dependency on coal to renewable energy. (but) Because of severe pollution issues, China and India have no other option but to continue to develop renewable energy sources," Prabhu said.

According to Prabhu, the Indian renewables industry, especially solar, should be more worried about GST impact, poor financial health of discoms, poor traction in demand growth, RPO (renewable power obligation) shortfall, curtailment and other issues.