Reflecting on the "People's President" to Solve India's Energy Challenges: Renewable Energy Act is Step in Right Direction

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Guest Post by Nehmat Kaur, NRDC India Representative

India's former President and visionary scientist Dr. APJ Kalam passed away this week, leaving behind a legacy of technological foresight and dedicated service to the nation. He was a leading proponent of clean energy to meet India's energy deficit. Following Dr. Kalam's views of harnessing energy from clean and renewable sources, India's Ministry of New and Renewable Energy (MNRE) has taken a significant step in the right direction. Earlier this month, the MNRE published a draft Renewable Energy (RE) Act that lays out the guidelines for a robust renewable energy ecosystem in India. More, however, can be considered to strengthen the RE Act further.

Dr. Kalam passed away on Monday evening while he was in Shillong, a city in North East India, delivering a guest lecture on "Creating a Livable Planet Earth". Dr. Kalam was a passionate aeronautic scientist, technologist and teacher. But science alone was not his passion. He was a leading advocate of energy efficiency and other clean sources of energy, including solar. He proposed clean energy solutions to address India's growing energy demands and challenges.

While a lot more can be done to fully realize the potential of clean energy, what we're seeing is a step in the right direciton. MNRE recently released a draft of the Renewable Energy (RE) Act in India that serves to articulate the guidelines for creating a supportive ecosystem for renewable energy deployment in India. With the Modi government target of 175 GW of renewables installed capacity by 2022, the Act would empower MNRE to streamline projects.


Dr. Kalam visits a solar plant in Uttar Pradesh (source).

Key Features of the Draft Renewable Energy Act

Strong Institutional Framework

The draft Act accords significant power to the central government to take "all measures as it deems necessary or expedient for the purpose of development and deployment of renewable energy in the country" among others. According to the Act, the state government now need to "formulate, monitor and implement" their respect RE policies and plans. The Authorities to be instituted under the Act include the National RE Committee and the National RE Advisory Group that would overlook the deployment of RE in India.

Robust Supportive Ecosystem

One of the most significant characteristics of the draft RE Act is the supportive ecosystem that it aims to create. The National RE Policy will serve as an umbrella policy for renewables in India. Additional supportive elements such as a national level resource assessment that includes techno-economic feasibility of all renewable applications, regularly updated technical and safety standards for RE projects, testing, monitoring and verification through state nodal agencies, development of necessary manufacturing expertise and skill building, and the creation of renewable energy investment zones all serve to strengthen the sector in India in the coming years.

Innovative Incentives and Financial Structure

The draft RE Act aims to set up a National RE Fund operated by the Central Government, taking the initial corpus and an annual inflow coming from India's National Clean Energy Fund. The Act proposes to use the Fund for "R&D, resource assessment, demonstrations and pilot projects, low cost financing, investments for skills development, supporting RE technology manufacturing, infrastructure development, promoting all forms of decentralised renewable energy." The National RE Fund will also provide capital for the State Green Fund set up by states to support RE deployment.

Strengthening the Renewable Energy Act Further

The RE Act and its provisions have the potential to transform India's energy sector and help power its rapid economic growth while building a sustainable future. However, the provisions of the Act can be strengthened further.

First, it is important for the Ministry to recognize that the Act envisions achievements that will mandate the need for strengthening institutional capacity within the Ministry. To deliver on the Act's requirements, expertise and personnel in the Ministry will have to be increased. With the finance and project development needed, such as the National RE Fund, the Ministry will need to expand its expertise beyond the technical realm. In addition to competitive compensation for expert staff and increased human resources, fiscal resources for the Ministry should be prioritized. To reach the ambitions of the Act, the Ministry needs to be supported and empowered through its structure and resource allocation to achieve those goals.

Second, attractiveness of renewable energy increases manifold when implemented in conjunction with energy efficiency. The Act should increase the focus on synergies with demand side management. By reducing energy demand, efficient buildings, transportation, and appliances make renewable energy more affordable. Specific guidelines for integrating energy efficiency in the proposed National Renewable Energy Policy should be articulated in the Act as well. For instance, bundling of incentives for weatherization and rooftop solar; encouraging utility programs to buy power generated through RE and power saved through energy efficiency at the same price could be some of the innovative mechanisms that can be articulated in the energy efficiency guidelines for renewable energy.

In addition to the above, the Ministry could also consider social and environmental aspects, including climate change, and the tools of integrated energy resource planning to clearly articulate guidelines around how the pricing of renewables would consider the social cost of conventional power.

The RE Act offers a sound basis for developing a robust renewables sector in India and serves as a good first step. However, for renewables to be a mainstream and considerable source of power in India's energy mix, much more can be brought into an integrated plan moving forward, including considerations on renewables grid integration, incentivizing utilities to meet RPOs as well as exploring solutions for energy storage.