A vision to facilitate sustainable development

India reaffirmed its commitment to mitigating climate change adversities by becoming a signatory to the landmark Paris Climate Agreement in 2015. Integrating environmental sustainability in its energy policy agenda, the government has resolved to enhance the share of renewable energy in the country’s overall energy mix.

India is firmly on course to ramp up renewable energy production to 175 gigawatts (GW) by 2022, reduce emissions of CO2 and other pollutants and meet its Paris Agreement targets ahead of 2030. As the country transitions to sustainable and energy-efficient renewable energy sources, the trade-offs between clean energy and conventional fossil fuels will need to be examined. Policy makers will also need to tackle key challenges that come with setting up a robust renewable energy infrastructure.

Challenges in green energy finance

The renewable energy sector in the country is marred by lack of innovative and viable financing options. A report by a panel constituted by Parliament has estimated that India will need to invest ₹2.61 trillion in order to achieve its target of 175 GW of renewable power by 2022. High capital costs and long gestation periods have typically been considered as key impeding factors for investors to explore the investment potential of renewable energy projects.

Limited budgetary allocations from public sector bodies and difficulties in channelising private sector funding towards green energy projects have vastly constrained their scale and scope. Sustainable funding is imperative to getting renewable energy projects off the ground and completing them within stipulated timelines, enabling them to avail of considerable cost and scale benefits.

Financial institutions in the country ned to change their functional mindsets and enable renewable energy sector players seamless access to short-term loans and low-interest debt financing options. The Ministry of New and Renewable Energy (MNRE) should place onus on incentivising bilateral and multilateral agencies to provide long-term financing and easy working capital to create a vibrant renewable energy ecosystem in the country.

Global financial institutions and markets will also need to demonstrate an avowed commitment in contributing to helping emerging economies like India strengthen their renewable energy capabilities and achieve their climate change goals.

Currently, India has two dedicated and pure play green financing bodies like the Indian Renewable Energy Development Agency (IREDA) and Tata Cleantech Capital Ltd (TCCL). These agencies are doing a phenomenal job in boosting clean energy investments, funding renewable energy transitions and helping sector players gain profitability and scale in their clean energy ventures.

Focus needs to be placed on allocating more capital and creating additional green financing intermediaries in the country. Such green banking institutions will have a key role to play in channelising public funds for investing in the country’s renewable energy sector. These intermediaries will be pivotal to leveraging the potential of climate finance in accelerating the shift to clean energy alternatives and helping India tackle its climate challenges.

Land acquisition conflicts

Difficulties in land acquisition are emerging as chief deterrents in the setting up of solar and wind energy projects in the country. Such projects are large-scale in nature and need massive tracts of land for installation. In a large number of cases, lands identified and allocated by State governments for setting up renewable energy projects are occupied by landless and marginal communities. They consider these lands as their primary assets.

Under threat of being uprooted from their centuries-old habitat, these communities have been demanding titles for the land and compensation as a displacement cost. If they are declared as encroachers by the government, the project affected persons (PAP) file petitions in courts. If their petitions are dismissed by the courts, they file an appeal against the dismissed petitions. The lack of a proper legal mechanism to resolve contentious land acquisition conflicts mean that solar and wind energy projects are stuck in long-pending litigations. Piling cases in the country’s courts have added to the financial hassles of renewable energy sector players.

Clean energy projects which require a large upfront capital outlay are under threat of becoming financially unviable due to burgeoning operational costs. Special fast-track courts should be set up to expedite the resolution of pending land acquisition disputes. Displaced populations should be identified and adequately compensated with a view to rehabilitating and providing them livelihood sustenance.

Realising the fact that land is a scarce natural resource which cannot be replenished, renewable energy projects should be set up on waste and degraded lands rather than prime agricultural lands. The government must focus on setting up an independent regulatory authority to ensure that land acquisition norms are not flouted and arable lands are not diverted for installing renewable energy projects. Such measures will not only minimise land use conflicts but also reduce cumulative impact on local populations and the environment.

The energy dynamics in the country are undergoing a rapid transformation as the demand for moving renewable energy mainstream gathers steam. Stakeholders in the energy sector like government agencies, power utilities, environmental organisations and consumer advocacy groups will need to collaborate and harness their synergies to position India as a world leader in renewable energy.

The writer is Founder, Lord’s Mark Industries Pvt Ltd

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