Over the years, the prosumer momentum is gaining traction in India and Renewable Energy (RE) is expected to bring a significant change in the energy landscape of the country in a decade or so. As of today, RE makes 18 per cent of the total installed capacity in the country which is around 62.84 GW thus attaining 4th position in wind energy and 6th position in solar energy, globally. Against the backdrop, this article previews the suite of supporting instruments and broad spectrum of programs in the country that led to the accelerated RE transition and distributed generation. Its objective is to critically analyze the policy and regulatory construct pertaining to distributed generators.
The total installed capacity in India stands at 333 GW with 66% share of thermal, 13% share of hydro, 19% share of RE, and 2% share of nuclear energy. After thermal, RE stands to have the second largest share in the energy mix, which is still making progress. The quick success made could be contributed to a number of factors including an end-user friendly framework and the sharp uptake in decentralized and distributed generation. In the given context, next section previews the support policies, schemes and regulations aimed at engagement of end-users in the RE procurement.
BRIEF OVERVIEW OF SUPPORT POLICIES:
In the year 2015, the Government of India announced a very ambitious target of harnessing 175 GW cumulative of RE by 2022. Having an exclusive and dedicated ministry for RE namely the Ministry of New and Renewable Energy (MNRE), coherent and committed efforts are made for an inclusive transition complementing the RE targets. Since then a visible impact could be witnessed taking place in the country’s energy sector.
Under the Jawaharlal Nehru National Solar Mission (JNNSM), a 100 GW capacity target was set for solar energy alone. Corresponding to the set target, FIT was announced for grid connected projects covering all RE sources such as Solar PV, wind and biomass. For stable revenue stream, RE developers have been empowered to sign long-term PPA at fixed tariffs under the National Tariff Policy (2006). Additionally, majority of states in the country have also have announced a regulatory framework on net-metering alongside FIT to encourage rooftop solar installments.
For supporting investments in RE, several local banks and financial institutions such as SIDBI and IREDA are aiding investors. Currently, a number of financial schemes have been introduced where most schemes involves soft loans including ones from international development organizations. For instance, the IREDA-JICA Financing Scheme (2011-2017) has supported the growth of India’s RE by almost 70% to around 40 GW in the last five years. Whereas, the REDA’s Solar Rooftop Financing Scheme provides loans to applicants with capacity needs ranging from 20kW to 1 MW. For promoting decentralized off-grid RE sources among the less resourceful civilians in rural areas, the government launched the Deendayal Upadhyaya Gram Jyoti Yojana (DDUGJY) scheme, where the scheme offers 90% financial support an only 10% as a loan.
In addition to the financial schemes, fiscal support instruments have also been put in place where a capital subsidy is provided by MNRE for RE installments. The subsidy varies in accordance with the typology and the size of the plants. Also, a range of other instruments such as concessional import duty, excise duty, tax holiday for several years are offered for incentivizing investment in RE.
Though the country is successfully transforming its electricity system, nonetheless a set of barriers in terms of subsidized electricity tariffs from the conventional sources, enacted import duties on solar modules, inadequate grid capacity by Distribution Companies (DISCOM’s), limited financial support and implementation lags of the announced policies and schemes are impeding smooth growth in the sector. The roof-top Solar PV installments predicating net-metering facilities is highly inconsistent across many states of the country not only because of the technical barriers facing the DISCOM’s but also their unwillingness to sacrifice premium customers who otherwise pays a higher tariff. Again, the approval process for availing net-metering is very time-consuming and could take up to 6 months. In the face of the stated barriers, it is very important that concerted efforts are made for resolution of the stated challenges for accomplishment of the ambitiously set goals.