Government committed to de-risking renewable energy investments: MNRE Secretary

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In a bid to allay fears among global investors, the Indian government has assured them of payment security mechanism to de-risk investments in renewables.

“Payment security mechanism to de-risk investments in renewables has been put in place,” said Ministry of New & Renewable Energy (MNRE) secretary Anand Kumar on the sidelines of a Climate Conference (COP25) in Madrid, Spain, adding that the Ministry is also working with farmers and commercial and industrial (C&I) consumers to embed them into the renewables value chain as direct stakeholders.

“To enhance the ease of doing business for developers, the government is committed to managing curtailments for renewable energy projects. [Towards that end] it is increasing the number of Regional Energy Management Centres to support the increasing share of renewables,” said the minister.

Significantly, the minister’s announcement comes at a time when analysts fear that potential disregard of past contractual agreements in Andhra Pradesh—along with the regular curtailment of renewable energy facilities and delayed payments by the state’s distribution companies (DISCOMs) to developers in the state—may drive foreign investors to reassess whether India’s renewable energy sector can be viewed with the same optimism as a few years ago.

Three of Andhra Pradesh’s top renewable energy developers (Greenko, ReNew Power and Mytrah Energy) are backed by foreign investors.

$300 billion investment opportunity

Kumar expressed confidence that India will meet its target of 175 GW renewable energy capacity by 2022 and increase it to 450 GW over time. The country’s current capacity is 83 GW, with additional 70 GW under fruition.

To achieve the year 2022 target in time, the Ministry of New and Renewable Energy (MNRE) is aiming to bid out the balance capacities for solar and wind by June 2020, so that developers get 30 months’ time to complete deployment, he said.

Given the ambitious RE targets, “Additional investments in renewable up to year 2022 would be about $80 billion at today’s prices and an investment of around $300 billion would be required up to 2030,” announced the minister, underlining the need for catalysing private investment and expand India’s clean energy market through innovative risk mitigation and aggregation instruments.

Talking of the initiatives, he informed about the Indian Renewable Energy Development Agency’s ‘green window’ initiative that aims to attract private capital to the under-served segments of the market.

Top contenders for the green window include storage, electric mobility, distributed renewables and energy efficiency.

IREDA is also launching its own Alternate Investment Fund to recycle its capital by attracting insurance, pension funds, etc, with the aim to deepen the bond market, and in turn, allow the projects to directly link with public funds.