100GW of solar power by 2022 has been India’s mantra right after the US-China made a joint declaration to combat climate change. This became imperative considering India is the next big developing economy that is crucial to combating climate change and its CO2 emissions have been rising, so is its economic development. The mantra has carried India through the Lima climate change conference which was not a success. But, it was clear, by declaring an ambitious target India was also seeking funds from US and President Obama’s visit to India meant that there was a possibility of US providing the needed funds.
At the moment I will ignore the question whether 100GW by 2022 is possible? (We need 97GW in the next 7 years, we have done 3GW in the past 3 years)
Prior to Mr. Obama’s visit to India, the US Exim bank and IREDA(Indian Renewable Energy Development Agency) signed an MoU for a financial support of USD 1Billion, which was more focused towards development of off-grid, micro grids and rural electrification projects. This is in addition to Euro 1 billion that German development bank KfW agreed for development of 1.5GW of rooftop projects. The World bank is not far off, it has been financing Solar Energy Corporation of India for large scale power projects.
The significance of US declaration
- Continuing the PACE (Partnership to Advance Clean Energy) Research and development programmes, which has in the recent times brought together collaborations of US companies, agencies with local electrical utilities and entrepreneurs.
- Accelerating clean energy financing through USTDA; A provision to provide USD 2 Billion in addition to US Exim’s 1 billion commitment to IREDA
Is it significant?
No! Currently India has received funding of nearly USD 8 billion for its clean energy initiatives which is far from the 100billion it needs to accomplish the 100GW target.
The reaction from the Industry
No one is really excited about the announcement, we expected a lot more from the visit.
- The loan from IREDA through the US exim would still be available to the developers at 10-12% because we have to consider hedging costs of nearly 8% in addition to 4% interest rate for the loans from US exim. A weaker rupee to the USD has not been helping us.
- The USTDA involvement would also mean a focus of developing US based companies establish their clean energy capabilities in India. But, US contribution to Indian cleantech is only 10%. First Solar and Sun Edison are the significant US based developers operating in India at the moment.
- In wind, GE turbines are the lone suppliers but the wind industry is very mature in India and India’s developmental capabilities are at a different level and and hence this could have less effect.
- Going forward, electric mobility could be an option. We could have a Tesla like revolution in India. Considering Mahindra who are into solar projects development also own the electric vehicle manufacturing company reva.
- Read more reactions here.
So it turns out having Mr. Piyush Goyal, the minister for Power and Renewable Energy as the minister in-charge accompanying the US president during his visit to India din’t have a significant impact on the announcements this time around.