India’s solar expansion programme may fall short of target: IEA

The International Energy Agency has said India’s ambitious programme for expansion of solar power in rural areas to provide energy security to farmers — PM-KUSUM — is likely to fall short of its target of setting up 31GW of solar power by 2022 on account of financing and implementation challenges. The Paris-based agency expects only 10GW, or roughly one-third capacity, of the total to come online by 2021-26.

“In addition, the KUSUM programme, supporting solar photovoltaic (PV) deployment in rural areas for agricultural consumers, has a target of commissioning about 31GW of photovoltaic (PV) capacity until 2024.However, due to financing and implementation challenges, we expect about 10GW of this photovoltaic (PV) capacity to come online over 2021-2026,” the IEA said in its Renewables 2021 report.

‘Upside potential exists if...’

PM-KUSUM, or the Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan, aims to provide water and energy security to farmers and enhance their income. The scheme was cleared by the Union Cabinet in February 2019, under which 30.8GW solar power capacity is targeted by 2022 with Central assistance of ₹34,035 crore, including service charges payable to implementing agencies. As on November 30, 2021, the total of 4,909 megawatts (MW) of solar power was sanctioned and 20MW has been installed.

“Upside potential in the programme also exists if financing and implementation challenges are resolved,” the report, which offers projections on RE power till 2026, added. India is an associate member of the IEA which advises industrialised nations on energy policies.

‘Banks enthusiastic’

The government has been very active in exploring various funding opportunities for PM-KUSUM. Convergence of the scheme with Pradhan Mantri Krishi Sinchayee Yojana (PM-KSY) and Agriculture Infrastructure Fund has been provided for better financing opportunities. Besides, for ease of availability of finance, the Reserve Bank of India (RBI) has included the three components of PM-KUSUM under Priority Sector Lending Guidelines.

On Wednesday, Power and Renewable Energy Minister RK Singh also held deliberations with banks to enhance access to financing for PM-KUSUM. In a tweet, the Ministry of New and Renewable Energy (MNRE) said banks are “enthusiastic about supporting solarisation of agriculture”.

On India’s efforts for expansion of RE, the IEA said, “Renewables expansion in India accelerates, but reaching targets on time requires persistent challenges to be resolved.”

Forecast revised

The agency said India is expected to add 121 GW of renewable capacity over 2021-2026, an 86 per cent increase on existing capacity, making it the third-largest growth market globally after China and the US. Solar PV leads this deployment (74 per cent), followed by onshore wind (16 per cent) and hydropower.

India’s forecast is revised upwards, but mostly due to accelerating capacity additions at the end of the forecast period following the dip in 2020, as some policy improvements have offset increasing challenges, it added.

“The financial health of India’s distribution companies (Discoms) remains a critical challenge, leading to delays in signing power purchase agreements (PPAs) with auction winners and putting some projects at risk of delay and cancellation,” IEA pointed out.

However, it welcomed India’s commitment towards promoting clean energy and said the country has maintained its firm support for renewables by contracting a record level of solar and wind capacity to reach its ambitious renewable capacity target for 2022 (175 GW), which excludes large hydropower. “During COP26, India announced new 2030 targets of 500 GW of total non-fossil capacity and 50 per cent renewable electricity generation share (more than double the 22 per cent share in 2020), as well as net zero emissions by 2070. These further confirm the country’s commitment to energy transitions,” IEA noted.

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