Home / Press Releases / New Re Policy to have Provisions for Renewable Generation Obligation : Shri Piyush Goyal PPAs in States Should be made Bankable : Shri Arvind Subramanian

New Re Policy to have Provisions for Renewable Generation Obligation : Shri Piyush Goyal PPAs in States Should be made Bankable : Shri Arvind Subramanian

Shri Piyush Goyal, Union Minister of State ( IC) for Coal, Power and New & Renewable Energy, said here today that non-compliance of RPO (Renewable Purchase Obligation) shall soon draw penalties. He said this at session titled Financing Renewable Energy: Success Strategies at the 1st Renewable Energy Global Investors Meet & Expo (RE-INVEST) summit. The Minister said that the new RE policy, that will be enacted soon, shall also have provision for Renewable Generation Obligation (RGO). He said that the cost of renewable, except small hydro, has come down drastically over the last decade. There is a need to socialise the cost of Renewable Energy (RE) through participation of all states, because currently only the states pushing for RE are bearing the burden, said he.

Shri Arvind Subramanian, Indias Chief Economic Advisor, said that the role of public sector financing will assume paramount importance if India is to expand its renewable energy footprint in power generation over the next decade. He also pointed out that while focusing on renewable energy is desirable, it could not be done without simultaneously greening coal, which will remain the primary source of energy for the near future.

For the foreseeable future, India is going to be reliant on coal. Its a fact of life and we should understand that. In that case, if we are to make progress on climate change and health, unless coal is made cleaner and greener, the arithmetic just wont add up. We should not lose sight in the middle of this discussion on renewable energy on the major investments that need to be made in greening coal, said Shri Subramanian, who was Chairing the session. He also stressed on the need to look at the possibility of making PPAs (Power Purchase Agreements) in states bankable.

While pointing at the persisting problems in financing the RE projects, Ms Arundhati Bhattacharya Chairperson, State Bank of India, pointed at the need of persistent policies, need to address issues in land acquisition, off-taking issues and management of the developers.

Ms Naina Lal Kidwai, Chief Executive Officer & Country Head, HSBC India, highlighted the role capital markets could play in helping the renewable energy sector . Particularly, we need to create a domestic green bond market which did trading worldwide worth $ 34 billion last year. India needs to participate and I also believe that priority sector lending should include renewables and better credit enhancement techniques, she said.

Ms Patricia Loui, Member, Board of Directors, US EXIM Bank, spoke about her experiences in working with the Indian renewable energy sector and other developing nations. The US EXIM Banks total exposure amounts to $ 7.2 billion dollars and India ranks second in total exposures after Mexico. Our portfolio in India has been growing due to a convergence of interests. The US Government has given us a mandate to lend which allowed us early leadership in financing projects in Gujarat and Rajasthan, which became a catalyst for other digital investments, she said. She also emphasised on the need for a basic template for PPA that would be applicable to all states.

Ms Loui also highlighted the US EXIM Banks competitive source of financing with the provision for an 18-year fixed interest rate at 3.13% that allowed financing to become feasible and cost-effective for a developing countrys institutions. The drivers of success in India have been your clear national goals on the renewable energy front which is crucial since the clarity sends out the message to investors that India is ready to do business, she added.

Other speakers included Mr Praveen Kadle (Managing Director & Chief Executive Officer, Tata Capital Ltd), Mr Ravneet Gill (Chief Executive Officer, Deutsche Bank), Mr Vivek Pathak (Regional Director, Asia Pacific International Finance Corporation) and Mr.T.M. Bhasin (Chairman, Indian Banks Association).

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