2019-12-04
Industry push for decentralised renewable energy not a priority these elections

Industry push for decentralised renewable energy not a priority these elections

While renewable energy has made it to manifestos of political parties standing in the Lok Sabha elections, specific concerns by the industry have been left out, despite a concerted appeal by the sector players.

On March 18, close to a month before the elections began, members of Clean Energy Access Network (CLEAN), comprising 160 private companies and NGOs, appealed to India’s political parties to include decentralized renewable energy solutions in their manifestos for the general elections.

Explaining why this move was initiated, Svati Bhogle, president of CLEAN, told Mongabay-India, “Decentralized renewable energy (DRE) is extremely significant for a country like India. DRE solutions are rapidly emerging as promising solutions for rural livelihoods and enterprises. Innovations in DRE will support productive uses and augment incomes, especially rural incomes. With the right policy environment, it can enable energy access faster and put an end to energy poverty.”

DRE refers to any system that uses renewable energy to generate, sometimes store and distribute energy in a localized way. It includes off-grid solar systems, mini and micro-grids powered by solar, biomass, hydro or a combination of these sources, improved biomass cook stoves, biogas and solar cookers and productive applications.

In its appeal, the network noted, “CLEAN represents clean energy practitioners and believes that DRE would contribute significantly to improving rural lives. It would be great if the political parties engage with CLEAN to understand the sector better and make informed decisions for promotion of DRE. CLEAN would like to extend support to all, to governments in energy planning for meeting basic needs and supporting and growing rural livelihoods through DRE.” The appeal was signed by Panasonic India, Barefoot Power, CSIR-NEERI, Observer Research Foundation and Prayas Energy Group among others.

“We hoped the request for the revival of the DRE sector would be met as the adoption of DRE would contribute positively to the India-ratified Paris Agreement to reduce carbon emissions”, Bhogle added.

Why decentralized renewable energy?

Charmaine Sharma, the co-founder of Observing I, a company that provides sustainable solutions for clean technologies, concurs with Bhogle. She believes that DRE is the most promising model to bring sustainable energy to all.

Centralized and non-renewable systems, namely, large-scale plants using fossil fuels such as oil and coal, are environmentally unsustainable because they are based on extensive use of rapidly depleting resources. Furthermore, these non-renewable resources go through several processes along their lifecycle, resulting in high greenhouse gas emissions which influence global climate change.

Even renewable energy systems, when run on a large scale, have cumulative environmental impacts during extraction, transportation, installation, and operation. Also, centralization of power – by local energy sources feeding directly into the grid – can lead to power losses at the source. Therefore, compared to centralized systems, local clean energy production, and distribution, or decentralization, increases reliability and reduces distribution losses, explained Sharma.

She added that an encouraging growth-oriented outcome of the DRE system is the employment and entrepreneurship opportunities it would generate in supply, maintenance, and repair of components. While there has been a growth in educational facilities in rural India, the increase in employment opportunities in or near the place of residence is minimal, she said. So, supporting DRE would provide impetus to rural employment opportunities as well.

DRE ignored in election manifestos

Charmaine Sharma is of the opinion that the DRE sector must be treated as one of the most progressive segments contributing to growth. Planning in terms of encouraging entrepreneurship, tax incentives and manufacturing capabilities should be listed and DRE should be given “special sector” status. Also, clearances required from industrial bodies for setting up such plants should be streamlined and minimized. However, she lamented that the sector is not being given the encouragement it requires.

The BJP election manifesto, even as it states renewable energy targets, emphasizes that it “will encourage solar farming on a massive scale” However, it ignores the appeal for decentralization. Meanwhile, the election manifesto of the Indian National Congress does include a mention of “encouraging investment in off-grid renewable power generation”, but no further specifics. The polls themselves may not have a direct impact on this sector, but the fact that it may not be given the importance and impetus it requires paints a dismal scenario for DRE.

Clean energy consultant and expert S.P. Gon Chaudhuri told Mongabay-India, “It is upsetting that no political party in India has mentioned in their manifesto that they will go in for renewable energy in a big way. There is no mention of anything in their action plan, that we will promote RE or go in for environmental protection.” This is unlike the scenario in other countries where the election results are decided based on environmental concerns and issues, he said.

However, Svati Bhogle feels that there is uncertainty in the DRE sector and it is not growing at the rate that it could. This is apart from the fact that investor confidence is low. All this, she clarifies, is not necessarily due to polls alone. “There are other sectoral issues as well that need to be addressed and the ecosystem for DRE needs to be built.”

Need of the hour: Well-defined policies

Charmaine Sharma believes that the national perspective on development goals for DRE projects has not been clearly defined. “Every state says that they will facilitate the setting up of large solar projects to feed power directly to the grid. The crucial point here is that if solar energy is to be fed directly to the grid, there needs to be power 24×7,” she explained. “Whenever there is an interruption in normal grid electricity supply, the power harvested from the solar source will not be uploaded to the grid and will be lost. It is, therefore, better to design and implement DRE systems that have their own mini-grids, ensuring that all the power harvested is completely utilized.”

She also suggested that the entire renewable energy industry should be given tax advantages for it to grow. For instance, before the implementation of Goods and Services Tax (GST), solar power projects in Uttar Pradesh had no value-added tax (VAT) applicable and in Haryana, it was 5 percent VAT. Now, there are separate GST rates for the solar panel, batteries, wiring, and infrastructure, ranging from 7 percent to 26 percent. However, after setting up the solar-powered system, it has to be billed to the client at five percent GST. There is, therefore, a mismatch between the input and output taxes. Though the refunds on purchased components will be paid to vendors, it causes cash flow problems, especially for small entrepreneurs, added Sharma.

Chaudhuri feels that whichever party comes to power will have to support renewables, but how much backing they are able to provide will have to be seen. “Already, we have crossed 70,000 MW of RE this year and it includes all forms – solar, wind, micro-hydro and biomass. Our target is 175 GW by 2022.” India has committed to the Paris Agreement, so any government that comes to power will have to stand by this UN commitment. There is support for sure, but to what extent depends on the government that comes to power and the policy it initiates, he concluded.