India’s Transition to Renewable Energy

(Navhind Times) ... India needs a massive investment to the tune of $225 billion to $250 billion over the next few years to meet its remit in this regard. It is germane to note that the private sector has paved the path in investing in renewable energy, having contributed over 90% of installed capacity (excluding hydropower). And sovereign wealth funds, which typically command a low cost of funding, have been quite active in this sector.

As this ambitious rollout of renewable energy projects begins, there are troubles to reckon with too. The rating agency rightly flags the concerns over the weak financial health of state-owned distribution companies that poses a challenge for the country’s renewable energy sector. Payment delays to these companies are quite common, leading to a build-up of receivables from off-takers and an increase in working capital debt for renewable energy companies. The weak financials of state-owned distribution companies have led to delays in the signing of power purchase agreements (PPAs) which, in turn, cause undue delays or cancellations, reflecting the sustainability and scale of operations of renewable energy projects, if prompt correctives are not put in place to restore the credibility of ambitious projects.

Be that as it may, the escalating trends and spikes in food prices, including vegetable oils, are partly due to the declared diversion of food for biofuels. The growing use of food crops for biofuel is in line with the mandate to augment the share of renewable energy sources. As a populous nation can ill-afford to let its millions groan under the upshot of food price flare-ups flowing from diversion of food crops for bio-fuels to make do with the excruciating cost of fossil fuels like petrol and diesel, the need for seeking cooperation and financial assistance from those who are far advanced in the ladder of development is overwhelming and is being boomingly articulated. That is the reason that India as a developing nation has ruled out evolving any national policy for Just Energy Transition, condemning its own people to austerity and abnegation in the consumption of energy when most developed countries and emerging economies of India’s comparable size, including China, are still on a high energy consumption spree and steroids with no stricken conscience for the preservation of the planetary balance and the ecological system. In sum, while India is indubitably committed to clean and green energy, the pace of transition to cleaner energy sources is predicated on the sui generis national circumstances and needs with principle of common but differentiated responsibilities and respective capabilities, the transfer of the requisite climate finance, and low-cost and efficient climate technologies.

The global community, particularly the rich world, has an axiomatic remit to shoulder a major burden in this context so that the rest of the world still struggling to find its feet on the ladder of development and well-being is assiduously assisted in the overall weal of humanity and preserving the planetary system from being further defiled. READ MORE