THE ROAD TOWARDS REGIME OF RENEWABLE ENERGY: BLOCKED OR ITS JUST A TEMPORARY GLITCH

TOPICS :   Business Environment Future
Kushal Srivastava
Kushal Srivastava
Jun 2 , 2020 18 min read 59 Views Likes 0 Comments
THE ROAD TOWARDS REGIME OF RENEWABLE ENERGY: BLOCKED OR ITS JUST A TEMPORARY GLITCH

While our mother nature enjoys this moment of respite, it will be vital to see as to how does the Renewable sectors of India which has always been an ardent advocate of nature itself manages to carve out ways in this gloomy period of crisis. India has always been reliable on foreign countries for procuring raw materials like solar cells, module glasses and wafers for installations of its different solar projects. Aftermath of Covid-19 is likely to affect the delivery mechanism, supply chain and delay is inevitable and since raw material is directly proportional to the manufacturing capability, it will affect the final output to a great extent and also impact India’s position in the domain of Renewable Energy (hereinafter referred to as ‘RE’). Major projects which were scheduled to be commissioned shortly and many other in the pipeline are ought to bear the brunt. Considering the fact that due to various reasons the control of price fluctuation will become a humungous task and thus pushing Billions of dollars of money is at brink of risk. India’s various objectives like achieving target of 175 GW Capacity in the domain of clean energy, which were supposed to fructify by next to next year i.e. 2022 will become a question in itself. Studies of last year depict that entire Asia has been among the leaders of the world in renewable sector and has witnessed a growth up of 7.6 % in its supply in the last year of 2019. The recent year of 2020 was supposed to be a vital point to initiate a decade full of cations in terms of climate and sustainable development, but alas the reality is not hidden from anyone more. The damage can definitely be seen as a Quadra headed monster which is bound to affect the project financing capacity at one hand and also the power demands on the other leading to reduction in the production and thereby affecting the entire economy of the country.

No evidence is needed to the fact that the working capital has faced a severe blow due to the ongoing lockdown in the country. Therefore, working capital support in terms of finance is what needs to be taken care of. Financial institutions like banks should open credit lines for the entities which are responsible for generation in the field of RE. Directives on the same line in terms of re-assessment of those Credit lines, adjustment of borrowing costs should be published. Another dent in the proverbial shield of RE is done by the sharp descent in the demand of power as a whole throughout the nation. The pan India lockdown has put forward a ‘full-stop’ to various industrial as well as consumer activities and thus leading to fall of consumption. In the first phase i.e. 1.0 of the lockdown itself a drop of 22 % is witnessed as compared to that of last year. This figure has not seen much shift in the successive phases of lockdown.

Moreover, considering the fact that entire value chain has been hampered, it needs to be revived and reinstituted. In the proverbial tree in form of Indian RE, another branch which can be watered and nourished properly is that of its domestic manufacturing sector. Boosting India’s domestic capability by way of incentives, budgetary announcements, relevant exemptions in terms of duties, taxes is need of the hour. Just to give an insight as to what a domestic entity is capable of, the contemporary happenings are witness to the fact that in spite of the prevailing circumstances of lockdown, a ray of hope coming from the news that Adani Green Energy which is a facet of one of the largest renewable company of India i.e. Adani Group has initiated a formation of Joint Venture with a French Firm named ‘TOTAL’ which holds its name in the field of producing natural gas, low-carbon electricity and various other market fuels. The foreign company has invested thousands of Crores in lieu of a 40% partnership with the Indian giant. Expansion of domestic production is the need of the hour. However, it is the government which will have to ensure that elements like fair and equitable treatment with foreign investors are not compromised with. Invoking of Force Majeure by foreign investors to exclude themselves from any contractual liability is a major turbulence in itself. Another major way out can be made by walking that extra mile and maintaining the confidence of an investor in this hard times and respecting contracts by being vigilant. Giving way for electronic medium to all concerned transactions is one such way which will help the entire domain of RE to survive as a “going concern”. This will act as a boosting capsule to the entire framework and various projects which are still in the pipeline and are yet to see the sunny days. In addition to this, there has to be acceptance as to the existence of inevitable circumstances. We need to acknowledge the fact that the execution of projects is not rendered permanently impossible but instead there is a hurdle of mere temporary impossibility which will certainly fade away in due course of time. Enhancing the credit and deepening the bond market could act as a ray of hope and act as a major step towards strengthening the domestic finance and thus ought to support the entire domain of RE and its versatile capacity. If one tries to overlook the present circumstance through the window embedded with transparent sheet of Utilitarianism, one can glorify the concepts of great philosophers like Jeremy Bentham and J.S. Mill and come to an understanding that though the objective of RE is circumscribed by hurdles as of now but the greater good still lies in switching the ambit of RE and acknowledging it not as a far-fetched option but a necessity next door. Eventually, an energy plan which is holistic and integrated, is the need of the hour.

References:

1. https://energy.economictimes.indiatimes.com/news/renewable/french-firm-totals-arm-invests-rs-3-7k-cr-to-form-jv-with-adani-group/75027454

2. https://www.unenvironment.org/news-and-stories/story/uptick-renewable-electricity-generation-2019

3. https://www.thehindubusinessline.com/economy/when-big-consumer-like-india-goes-into-lockdown-it-reduces-energy-demand-by-about-30/article31469208.ece

Cover Page Credit: CCI INDIA, cciindia.org


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