Committee on Energy Skeptical About India's Chances of Meeting its 2022 Solar Target

The Standing Committee on Energy has presented the third report on the demands for grants of the Ministry of New and Renewable Energy (MNRE) for the year financial year (FY) 2020-21.

The Committee took evidence from the representatives of the Ministry for the year 2020-21 and said that the ministry needed to do a lot to meet the 2022 renewable target.

India has a total estimated potential of 748.99 GW of solar power, 302.251 GW of wind power, 211.33 GW of small hydropower, 17.53 GW of biomass power, 5 GW of cogeneration bagasse, and 2.55 GW of waste to energy.

As on January 31, 2020, thermal power accounted for 230.19 GW of installed capacity with 62.43% of the total share, nuclear power accounted for 6.7 GW of installed capacity with 1.84% of the total share, and large hydropower accounted for 45.40 GW with 12.31% of the total share. Also, renewable energy accounted for 86.32 GW, with 23.42% of the total market share.

When asked about the reasons for the hike in the central plan outlay for the year 2020-21 as compared to the last year, the Ministry stated:

“For the year 2020-21, the budget estimate is ₹57.53 billion (~$772.41 million), and the budget estimate and the revised estimate for the year 2018-19 was ₹52.54 billion (~$705.41 million) and ₹38.91 billion (~$522.41 million) respectively. During the year 2020-21, there is an increase of  ₹4.98 billion (~$66.86 million) over the budget estimate of 2019-20, which is an increase of only 9.48 %.”

When asked if the allocation made for FY2020-21 would be sufficient to achieve the targets, the Ministry stated that if additional funds are required, it would be sought at the revised estimate stage.

A total of ₹12.99 billion (~$173.12 million) has been allocated by the Ministry for the wind target of 3 GW, ₹1 billion (~$13.43 million) has been allocated to hydropower for a target of 100 MW, ₹750 million (~$10.07 million) has been allocated to biopower for a target of 280 MW, and ₹21.49 billion (~$288.52 million) has been allocated to solar power for the target capacity of 9 GW. For the KUSUM program, ₹3 billion (~$40.28 million) has been allocated. For green energy corridors (GEC), an amount of ₹3 billion (~$40.28 million) has been allocated.

In a query regarding the achievement of the target, the Ministry said that the target for the solar power was 8,500 MW for FY2019-20, and the Ministry has achieved 5,885 GW as on January 31, 2020.

Speaking about the status of the renewable energy projects, the Ministry said that the total target for the solar power as on January 31, 2020, is 100 GW, out of which the installed capacity and on January 31, 2020, is 34.03 GW. Out of this, 23.88 GW is under development, and 39.47 GW has been tendered. The total installed capacity and projects under the pipeline are 87.38 GW.

Similarly, for wind power, the target capacity is 60 GW, and the installed capacity stood at 37.61 GW with 9.25 GW under implementation. The total installed capacity along with projects under the pipeline stood at 49.06 GW.

In its annual report (2019-20), the Ministry said that to facilitate the integration of large-scale renewable generation capacity addition, the creation of intra-state transmission system (ISTS) has been approved in the states of Andhra Pradesh, Gujarat, Himachal Pradesh, Karnataka, Madhya Pradesh, Maharashtra, Rajasthan, and Tamil Nadu. The estimated cost of the project is ₹101.416 billion (~$1.36 billion), with the government of India contributing ₹40.566 billion (~$544.65 million).

The cumulative commissioned capacity of wind projects stood at 37.60 GW, and projects under implementation stood at 9.25 GW, and the ongoing bids accounted for 2.20 GW, bringing the total to 49.05 GW.

Replying to a query about the shortfall in achievements of physical targets, the Ministry stated: “There is no shortfall in the achievement of the target. However, major constraints being faced by the developers in the commissioning of solar are land acquisition, evacuation infrastructure, and non-conducive state policy for the development of solar and business environments such as the unwillingness of DISCOMS to purchase solar power. The Ministry is making concerted efforts to sort out issues with the help of all stakeholders.”

In response to a query regarding the rooftop solar program, the Ministry said that the involvement of multiple stakeholders, the reluctance of DISCOMs due to revenue loss, and lack of mandatory notifications are some of the reasons for the slow progress of rooftop.

On being asked about the status of the actual implementation of the net metering in the country, the Ministry stated:

“All the state and joint electricity regulatory commissions have issued net metering regulation orders. However, the implementation is different in various DISCOMs. The revenue erosion due to the adoption of solar by high electricity tariff paying customers, availability of solar power during day time when there is less electricity demand by users, and non-availability of solar power during peak demand time are few of the concerns of the DISCOMs.”

Talking about the high capital investment requirement and maintenance cost of solar rooftops, the Ministry added, “The cost of solar rooftops is decreasing, and the Ministry has also increased the subsidy amount to 40% in comparison to earlier 30% for capacity up to 3 kW. Consumer needs to invest only 60% of the cost of the system discovered by the DISCOM through the bidding process.

Observations and Recommendations

The Committee noted that the Ministry sought an allocation of ₹95.23 billion (~$1.28 billion) for the year 2020-21, but ₹57.53 billion (~$772.4 million) have been approved. Given the large targets assigned to the Ministry, allocation of 40% fewer funds as compared to the amount sought seems unjustifiable. Keeping in view the allocation of less than the required amount and the increased targets assigned to the Ministry, the Committee recommends that additional funds should be provided to the Ministry at the revised estimate stage.

The Committee added that the Ministry has continuously failed to achieve its yearly physical targets. For the years 2017-18 and 2018-19, against the grid-connected renewable energy target of 14.445 GW and 15.355 GW, the Ministry could achieve 11.876 GW and 8.519 GW, respectively. Given the time-bound target of 175 GW by 2022, such performances are disappointing. The Committee feels that with continuous non-achievement of the assigned yearly physical targets, the Ministry may find it challenging to achieve 175 GW by 2022.

The Committee said that the Ministry has not been able to utilize even the decreased allocations during the previous years fully. It could only utilize 92.37%, 86.97%, and 81.02% of revised budgetary allocations during the years 2017-18, 2018-19, and 2019-20 (up to January 2020), respectively.

The Committee noted that under the Green Energy Corridor project, the creation of ISTS had been approved with a target of establishing grid sub-stations with an aggregate transmission capacity of nearly 22,600 MVA and installation of 9700 ckt-km of transmission lines. The project was supposed to be completed by March 2020, but the commissioning schedule has been extended until December 2020.

The Committee noted that against the target of 60 GW of installed Wind Power by the year 2022, a total capacity of 37.61 GW had been installed as on January 31, 2020. The Committee felt that the Ministry was not able to keep up the momentum it acquired in the initial years as its performance during the last few years is highly frustrating.

The Committee further noted that a target of 100 GW of solar capacity had been set to be achieved by 2022. As of January 31, 2020, a capacity of 34.03 GW has already been installed. The Committee felt that the Ministry has a massive task to commission the remaining 65.96 MW of solar capacity in just about two and a half years to meet the stipulated target of 100 GW by 2022.

The Committee noted that the government had set a target of 40 GW of installed rooftop solar power by 2022. Against the target of 3 GW in 2019-20, only 580.15 MW have been installed as on January 31, 2020. The Committee said it is highly distressed with the dismal performance of the Ministry in this sector.

The Committee observed that some of the states have been falling behind in RPO compliance, possibly due to pre-existing long term PPAs with conventional power producers and an insufficient increase in electricity demand. However, the Committee feels that the waiver of RPO should not be permitted. The Committee recommends that the Ministry should ensure RPO compliance and may enforce penal provisions against the defaulting Obligated Entities.

Recently, in another report, the Committee also pointed out that issues like quality and affordable electricity to consumers, low per capita electricity consumption, and distressed distribution companies (DISCOMs) are also haunting the sector. The Committee has suggested that instead of an “eye-wash measure,” a long-term, thoughtful and efficient planning is the need of the hour to make the sector healthy, competitive, sustainable, and vibrant.

In December 2019, Mercom reported that the Parliamentary Standing Committee on Energy had expressed its concerns about the performance of the Ministry of new and Renewable Energy and the country’s ability to achieve its 100 GW solar target by 2022.

In 2019-20, the budget outlay was ₹9.20 billion ($130 million) for wind power, ₹30.05 billion ($440 million) for solar (both grid-connected and off-grid) and ₹5 billion ($73 million) for green energy corridor, ₹40.66 billion ($590 million) was toward the power supply program of Deendayal Upadhyay Gram Jyoti Yojana, and ₹10.35 billion (~$150 million) for the power system development fund.