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India’s energy minister Piyush Goel said that the country is well on track to achieve solar power capacity increase of over 10,000 MW over the next one year. This is based on the successful implementation of over 20 GW of solar power tenders that were released over the past one year. Most analysts and consultants do not think that even half of the target can be achieved. The main concerns in reaching the target are:
- There is not enough transmission capacity to move the power from the generation to the demand centers. Developing the grid in such a short time may not be possible.
- Financial constrains as 10000 MW will require an investment of about $5 billion. (Personally, I don’t think this will be an issue, given the huge investor interest in India’s RE sector and low rates being seen).
- Skepticism about the execution given that India has a spotty record in developing infrastructure be it road, railways, ports etc.
- The low bidding prices seen in the tender may not give adequate returns to developers who may find it difficult to get debt financing, given the low equity returns which are expected.
On the other hand, Piyush Goel has been one of best ministers under the new government. In coal and power generation he has made impressive strides, with coal production increasing the fastest in recent times and an energy deficit India turning into an energy sufficient India in the last one year. Thermal power plants now have the happy problem of a coal surplus. Piyush Goel has also made impressive efforts in the areas of renewable energy and energy efficiency. He has distributed around 100 million LED bulbs in the last one year, leading to a price drop of over 60%.
India has also achieved a record breaking 7 GW of renewable energy capacity addition in the last one year, exceeding the target which had been set earlier. If there is a good focus on execution and removal of process and regulatory impediments, then there is a good chance that India could get very near to that target making India the 3rd largest market in the world, after USA and China.