Right Direction: Policy interventions needed to tap the true potential of distributed renewables

Policy interventions needed to tap the true potential of distributed renewables

Jaideep Mukherji, CEO, Smart Power India

The energy sector for any developing nation acts as a backbone for holistic socio-economic growth. Since the Paris Agreement in 2015, the renewable energy sector has been one of the critical sectors in India, being identified under va­rious flagship schemes such as Make in India. India has set for itself an ambitious target of 175 GW of renewable energy capacity by 2022. Of this, solar and wind continue to be the pillars, leading the ene­rgy transition mission for India. At the co­m­munity level, the vulnerable people are already at a socio-economic disadvantage and the climate crisis threatens to pull them back even further. The lives and livelihoods of this section of the population – the rural poor, who rely primarily on agriculture for their income – are affected the most. In the Asia-Pacific region, this segment comprises 60 per cent of the population or about 2.2 billion people. Cli­mate change has and will continue to directly impact these people. Turning to re­newables en­cou­rages so­c­io­-­economic growth and provides re­si­lience against worsening climate outcomes.

Slew of policies

Recently, the draft National Electricity Plan 2022 (NEP 2022) envisioned a significant increase in the installed solar power capa­city by 2030. Other measures have also been taken to strengthen the sector, in­clu­ding permitting foreign direct investment up to 100 per cent under the automatic route, waiver of interstate transmission system charges for interstate sale of solar and wind power for projects to be commissi­on­ed by June 30, 2025, setting up of ultra-me­ga renewable energy parks to provide land and transmission to renewable power developers on a plug-and-play basis, and schemes such as the Pradhan Mantri Ki­s­an Urja Suraksha evam Utthaan Maha­bhi­yan and 12 GW CPSU Scheme Phase II. There is a push on “Make in India” with an aim to boost India’s manufacturing ca­pa­bilities and exports, and under the rece­nt production-linked incentive scheme, ma­nufacturers receive support for setting up integrated manufacturing units of high ef­fi­ciency solar PV modules and their sales.

With this impetus, distributed renewable energy (DRE) has become a viable soluti­on. Minigrids and rooftop systems are helping rural and peri-urban communities acc­ess reliable energy from clean sources for household and productive use, with re­co­r­ded improvement in customer satisfaction. There are many other standalone so­lu­tions of smaller capacities that rural areas can use, such as solar lanterns, solar home sol­utions, or even a community solution such as a mi­cro­grid. But a minigrid is the only alternative that provides the quality and reliability of electricity that can be used for bu­siness activities, offering electricity without fluctuation, which can easily power ma­chinery as well as equipment.

Challenges and gaps

While the policy ecosystem is supporting momentum for solar rooftops and minigrids, there continue to be roadblocks that slow down DRE adoption. At the rural level, there is a perceived unaffordability due to a myopic outlook and lack of awareness am­ong customers around high per unit costs and the long-term cost efficiency of minigrid electricity. Upfront capital fin­ance for rooftop systems also remains an issue. These challenges are being addre­ss­ed by strategic partnerships and looping in private players – multilateral and financi­ers – that are not only creating awareness around the benefits of solar to increase demand but also providing facilities such as micro-finance and loans for easy adoption. In India, an emerging country, the per capita consumption of electricity is low, approximately 1,200 kWh – one-twelfth of that of the US and a third of the global average. As we know, per capita consumption of electricity often acts as a proxy for economic growth. Moving up the energy consumption ladder, especially at the community level, can help build community resi­lien­ce through improved welfare services. Reliability and affordability should be the cornerstone of energy policy in order to protect vulnerable communities.

Solutions and support

Smart Power India (SPI), a subsidiary of the Rockefeller Foundation, transitioning to the Global Energy Alliance for People and Planet, works towards unlocking the market potential and crowding in large developers and financiers for a scale-up. Earlier this year, SPI launched the rooftop solar pilot programme for MSMEs in Bihar, Uttar Pradesh and Odisha and now wants to showcase its merits to the community and other stakeholders.

The need of the hour is to provide soluti­ons to establish a long-term conducive eco­­system for the adoption of DRE-en­abled livelihoods, awareness ca­m­pai­gns, financial assistance through loa­ns, technical as­sistance from multilaterals, private sector support and participation of public sector  banks to help India in achieving the mammoth energy transition target.