According to a report published by the Pew Charitable Trust, investments in the Indian renewable energy sector are likely to increase by a staggering 369 percent over the next decade.
The report analyses the potential growth in the G20 nations on the basis of three sets of scenario — present policies, Copenhagen policies and enhanced renewable energy policies.
The report states that even if India maintains the current set of policies, it is likely to attract highly significant amount of investment over the next decade. The report states that under the current policy scenario, investment in India's clean energy sector is likely to increase to $18 billion in 2020 compared to $2 billion in 2009. The cumulative investment over ten years from 2010-2020 are likely to reach $118 billion, that is, an increase of 369 percent.
Under the scenario that the commitments in the Copenhagen Accord are adhered to, the clean energy investments in 2020 would jump to $20 billion with cumulative increase over a decade reaching $125 billion, an increase of 416 percent.
And if India decides to implement 'enhanced' renewable energy policies, the increase in investments in 2020 would reach $33 billion. The cumulative increase in investment from 2010 to 2020 would be $169 billion, an increase of 763 percent.
The report notes the salient features if India's renewable energy policies to justify its predictions and estimates.
- Attractive tariffs for wind farms
- Tax incentives and favorable accounting procedures
- Opening several revenues streams for power plants
- Relaxing norms for gird-interactive power plants
- National Solar Mission which aims at installing 20 GW of solar energy capacity by 2022
- Renewable Energy Certificates scheme and renewable energy targets
The report also points out the weak areas of the Indian renewable energy sector and proposes general solutions for the removal of roadblocks in the implementation of policies.
- Removal of legislative and bureaucratic hurdles
A parliamentary committee recently pulled up the New and Renewable Energy Ministry for dragging feet over the implementation of the first phase of the National Solar Mission. This is real problem in the Indian government and can be solved only through introspection and realisation of what is at stake.
- Smart grid and grid connectivity
India suffers greatly from lack of adequate transmission infrastructure. Several thousand villages remain un-electrified. For comprehensive growth in renewable energy sector it is important that he transmission and distribution system is upgraded so to improve the management of power. IBM is planning to offer its smart grid solutions to India and has collaborated with one of India's leading power distribution companies to explore opportunities.
- Investing in offshore wind energy
As of June 2010, India had an installed wind energy capacity of almost 12,010 MW. However, it has no offshore wind farms. With a coastline spanning up to 7,000 km, India has vast potential to tap its offshore wind resources. India's leading wind energy technology research centre, C-WET has already undertaken a study to analyze the feasibility of offshore wind farms in India.
- Promoting carbon capture and storage
Finally, the report cals the Indian government to incentivize carbon capture and storage technologies so as to prepare its industries for inevitable binding commitments for reducing carbon emissions. This would also make the renewable energy technologies more popular and competitive with the conventional power generation technologies. The Indian government already charges a coal tax of $1 per ton for coal mined domestically or imported. This tax is used investing in renewable energy technologies through the Clean Energy Fund.
India is certainly a major emerging market for renewable energy investments. However, the issues and hurdles faced by investors in other sectors also haunt the clean energy sector. The government must realize that an accelerated growth in renewable energy sector could be a bargaining chip during the climate talks for a binding emission reduction target. Therefore, the Indian government must work to remove the bureaucratic hurdles, technology barriers and investment bottlenecks to ensure smooth implementation of its policies.