News & Trends

Incentivise nascent renewable tech – The Economic Times


The power ministry has put out a forward-looking discussion paper on renewable energy (RE) that seeks, rightly, to incentive newer RE technologies, and proposes a more stable and predictable policy regime for extant RE generators. The policy intention is, of course, to boost RE by tapping our large solar and wind potential to traverse to a low-emissions energy sector. The effort to channel resources to less mature RE technologies like pumped storage hydro is welcome.

The paper proposes rationalisation of the incentive structure for maturing RE technologies like solar photo-voltaic and wind power. Note that those who buy RE are issued Renewable Energy Certificates (RECs) to duly meet their Renewable Energy Obligations, and also avail concessions like waiver of transmission charges. But solar and wind power tariffs have fallen substantially, thanks to proactive policy to tap scale economies, and now are even lower than the variable charges for non-renewable thermal energy plants. And given the cost-competitiveness of extant RE plants, and greater capacity installed nationally, twin incentives like waiver of transmission charges and RECs seem unwarranted, the paper avers. Instead, the timelines for RECs are sought to be extended for 15 years for new RE projects, and up to 25 years for extant RE plants.

Further, a higher technology multiplier is to be applied for newer and relatively costly RE technologies such as off-shore wind plants, pumped storage hydro and hydrogen units. A technology policy for newer RE makes sense, although stormier seas sound caution on offshore wind. The energy sector is in a state of flux, and it is entirely possible that newer technologies are more efficient in moving to a low-emissions economy.

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