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While the “commitments” made by renewable energy companies to put up 266,000 MW of solar and wind projects have been commented upon universally as “unrealistic and too ambitious”, observers also point to the fact that the order of interest shown is a sign of the growing importance of the renewable energy industry.
(Some 200 companies gave letters of commitment to Prime Minister Modi at the RE-Invest 2015 summit earlier this week, to put up renewable energy projects. The commitments sum up to 266,000 MW, compared with India’s existing total power capacity of 230,000 MW today.)
“Demonstrating increased ambition and commitment to solar development at the highest level of politics and industry is a positive development for the Indian solar market,” says Adam James, solar analyst with the US-based GTM Research.
He views the “new emphasis on extremely large projects with some scepticism due to the technical and financial risks involved,” but says that GTM Research believes India would be one of the world’s top five solar markets by 2020.
“The interest and response that RE-Invest 2015 has generated is a reflection of the trend of the rise of renewable energy,” says Santosh Kamath, Partner and Head-Renewable Energy, at the global consulting firm, KPMG. “The commitments show the growing confidence of renewable energy companies in India,” says Ashwin Gambhir, an analyst at Prayas group, a Pune-based energy think-tank.
Challenges
However, many observers also point to the many daunting challenges. “There are numerous challenges in the power sector from land acquisition, power evacuation, to high cost of capital and continued muted interest from equity investors,” says Rama Bethmangalkar of VenturEast, an Indian venture capital company that has invested in renewable energy companies.
Many observers also note that among the biggest challenges are the financial health of the power supply companies, most of whom are State-owned and bankrupt. These are the companies that will buy electricity from renewable energy producers.
Dr Arunabha Ghosh, CEO of the Delhi-based think-tank, Council on Energy, Environment and Water, has called for credit guarantee and payment security measures if India’s renewable energy dreams are to come true.
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