Arvind Subramanian, India’s Chief Economic Advisor, said
that the role of public sector financing will assume paramount importance if
India is to expand its renewable energy footprint in power generation over the
next decade.
Piyush Goyal, Union Minister of State ( IC) for Coal, Power
and New & Renewable Energy, said here today that non-compliance of RPO
(Renewable Purchase Obligation) shall soon draw penalties. He said this at
session titled ‘Financing Renewable Energy: Success Strategies’ at the 1st
Renewable Energy Global Investors Meet & Expo (RE-INVEST) summit. The
Minister said that the new RE policy, that will be enacted soon, shall also
have provision for Renewable Generation Obligation (RGO). He said that the cost
of renewable, except small hydro, has come down drastically over the last
decade. “There is a need to socialise the cost of Renewable Energy (RE) through
participation of all states, because currently only the states pushing for RE
are bearing the burden,” said he.
Arvind Subramanian, India’s Chief Economic Advisor, said
that the role of public sector financing will assume paramount importance if
India is to expand its renewable energy footprint in power generation over the
next decade. He also pointed out that while focusing on renewable energy is
desirable, it could not be done without simultaneously greening coal, which
will remain the primary source of energy for the near future.
“For the foreseeable future, India is going to be reliant on
coal. It’s a fact of life and we should understand that. In that case, if we
are to make progress on climate change and health, unless coal is made cleaner
and greener, the arithmetic just won’t add up. We should not lose sight in the
middle of this discussion on renewable energy on the major investments that
need to be made in greening coal,” said Shri Subramanian, who was Chairing the
session. He also stressed on the need to look at the possibility of making PPAs
(Power Purchase Agreements) in states bankable.
While pointing at the persisting problems in financing the
RE projects, Ms Arundhati Bhattacharya Chairperson, State Bank of India,
pointed at the need of persistent policies, need to address issues in land
acquisition, off-taking issues and management of the developers.
Ms Naina Lal Kidwai, Chief Executive Officer & Country
Head, HSBC India, highlighted the role capital markets could play in helping
the renewable energy sector . “Particularly, we need to create a domestic green
bond market which did trading worldwide worth $34 billion last year. India
needs to participate and I also believe that priority sector lending should
include renewables and better credit enhancement techniques,” she said.
Patricia Loui, Member, Board of Directors, US EXIM Bank,
spoke about her experiences in working with the Indian renewable energy sector
and other developing nations. “The US EXIM Bank’s total exposure amounts to
$7.2 billion dollars and India ranks second in total exposures after Mexico.
Our portfolio in India has been growing due to a convergence of interests. The
US Government has given us a mandate to lend which allowed us early leadership
in financing projects in Gujarat and Rajasthan, which became a catalyst for
other digital investments,” she said. She also emphasised on the need for a
basic template for PPA that would be applicable to all states.
Loui also highlighted the US EXIM Bank’s competitive
source of financing with the provision for an 18-year fixed interest rate at
3.13% that allowed financing to become feasible and cost-effective for a
developing country’s institutions. “The drivers of success in India have been
your clear national goals on the renewable energy front which is crucial since
the clarity sends out the message to investors that India is ready to do business,”
she added.
Other speakers included Praveen Kadle (Managing Director
& Chief Executive Officer, Tata Capital Ltd), Ravneet Gill (Chief Executive
Officer, Deutsche Bank), Vivek Pathak (Regional Director, Asia Pacific
International Finance Corporation) and Mr.T.M. Bhasin (Chairman, Indian Banks
Association).
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