The Parliamentary Standing Committee on Energy has said that the Ministry of New and Renewable Energy (MNRE) will find it difficult to install 175 GW of renewable energy capacity by 2022.

In its report on the demand for grants by MNRE for the financial year (FY) 2021-22, the committee observed that the ministry consistently failed to achieve its physical targets. During 2020-21, 5.47 GW renewable capacity was installed as of January 2021 against the 12.38 GW target. About 4.16 GW of solar capacity was installed against its 9 GW target and nearly 940 MW of wind capacity against the 3 GW target.

For the years 2018-19 and 2019-20, the ministry installed 8.51 GW and 8.76 GW of grid-connected renewable energy against the target of 15.35 GW and 11.85 GW, respectively.

Budget allocation and utilization

The ministry has allocated ₹43.24 billion (~$592 million) for grid-connected renewable energy and ₹11.80 billion (~$161.55 million) for decentralized renewable energy for FY 2021-22.

The committee noted that the budget allocation was reduced by about 26% for the year 2019-20 and 38% for 2020-21. The ministry had utilized 91.53% and 69.78% of the budget allocations during 2019-20 and 2020-21, respectively.

“There have been instances of delay in commissioning, non-achievement of project performance, and delay in inspection results in lower utilization of fund. For the financial year 2020-21, the reason for lower utilization of funds is the COVID-19 pandemic.”

The committee suggested that the ministry streamline its budget formulation process and increase its fund absorption capacity to avoid adverse impacts on the ministry’s demand for budgetary allocations.

Observations and recommendations

• Rooftop Solar

The parliamentary committee also referred to the MNRE’s ‘weak performance’ in implementing the solar rooftop program. The country’s cumulative installed rooftop solar capacity stood at  3.73 GW as of December 31, 2020, against the target of 40 GW by 2022.

It suggested that a single-window clearance system be created for the transparent and quick disbursement of subsidies. It called for the promotion of the benefits of rooftop solar systems in print and electronic media.

• PM-KUSUM Program

The committee observed that the allocation under the program had been reduced to ₹2.10 billion (~$28.75 million) at the stage of the revised estimation, an 80% decline compared to the budgetary allocation of ₹10 billion (~$136.93 million).

Under component A of the program, the ministry approved 1 GW of capacity against the 10 GW target as of December 31, 2020. Under component B, the ministry allocated 1,71,270 stand-alone solar water pumps against the target of 2 million pumps. Under component C, the ministry approved 82,308 grid-connected solar-powered agriculture pumps against the target of 1.5 million pumps.

• Solar Manufacturing

The committee noted that the solar sector’s current production capacity, including 2.5 GW solar cells and 9 to 10 GW of solar modules, was insufficient to meet the annual demand of 30 GW.

The ministry said the cost difference between domestic and imported solar cells is about 21-22%. The safeguard duty is currently under 15% and does not help local manufacturers set up new manufacturing facilities.

To enhance domestic production, the Union Budget 2021 had allocated ₹45 billion (~$616.18 million) for high-efficiency solar modules manufacturing as a part of the production-linked incentive program.

On the rationale behind imposing basic customs duty and safeguard duty when they get covered under the ‘change in law’ clause of the power purchase agreement, the ministry has said that they have suggested the government impose basic customs duty starting April 2022 by which time the existing projects can be commissioned.

• Green Energy Corridor Project

The committee noted that the Green Energy Corridor Project, an intra-state green energy transmission system project, had not progressed at the desired pace as a total of 7,364 circuit kilometers of transmission lines and 9,976 Mega Volt Ampere (MVA) capacity substations have been constructed, as of January 2021, against the target of 9,700 circuit kilometers transmission lines and 22,600 MVA substations.

It said, “Among the various factors stated to be responsible for the slow pace in the progress of Green Energy Corridor Project, the inadequate monitoring by the ministry and lack of priority which the project deserved to be given, have also contributed a lot in missing the target.”

• Wind Power

The committee observed that the ministry was unable to achieve its wind target during the past three years with a shortfall of 53% during 2017-18, 63% during 2018-19, and 30% during 2019-20.

To boost the renewable energy sector, the committee suggested that the ministry must continue to financially support wind power projects and facilitate private players to achieve the 60 GW wind energy target by 2020.

In March 2020, the committee had expressed its concerns about the performance of MNRE and the country’s ability to meet its target of 175 GW of renewable capacity by 2022. The Committee’s report in 2019 also found the inability of the ministry to keep up with the yearly achievements. The focus in the 2018 report was the green energy corridor.