Policy uncertainty, lack of clarity may hamper investments in renewable energy sector: CEEW

Investments in the clean energy sector may be hampered if policy uncertainty in the renewable energy sector persists, feels Arunabha Ghosh, Chief Executive Officer at the Council on Energy, Environment and Water (CEEW).

“India will require investments of nearly $30-33 billion a year to meet its renewable energy addition targets till 2030, not including additional infrastructure investment. The present investment for renewable energy in the country is only $10-11 billion a year. The gap is because investors want clarity and stability of policy regime before committing to this investment,” Ghosh said.

“Measures such as safeguard duties add to the uncertainty in the domestic renewable energy sector, for investors, developers, and creates little benefit for manufacturers. Domestic manufacturing needs longer term support such as access to cheaper capital, infrastructure support, and policy clarity regarding incentives for the sector.” he added.

The CEEW – Centre for Energy Finance and the International Energy Agency have jointly authored a report titled – Clean Energy Investment Trends 2019, Evolving Risk Perceptions for India’s Grid-Connected Renewable Power Projects.

The report said, “The imposition of safeguard duties on solar cells and module imports in 2018 translated into increased module costs for developers, with imports accounting for around 90 per cent of the market share for modules in India.

“This increase in input costs after the final imposition of duties, and the uncertainty associated with the pass through of increased input costs before the final ruling by the Directorate General of Trade Remedy, were the major drivers of the increase in tariffs realised at solar auctions in 2018, considerably higher than the record low tariff of ₹2.44 a unit realised in 2017. Given the tariff outcomes, tendering agencies cancelled the awarded projects for a total capacity of 4.85 GW, equivalent to half the total solar power generation capacity commissioned in 2018. These cancellations have slowed down the pace of project award and capacity addition and negatively impacted investor sentiment,” the report said.

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