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Despite the vague promises and platitudinous statements of intent that it contains, the proposed National Renewable Energy Act, in the form that has been put up for public comments, should come as a measure of relief to the renewable energy industry inasmuch as it also yields to several of the industry’s longstanding demands. For instance, it gives legislative backing to the call that a part of the National Clean Energy Fund be earmarked for the renewable energy sector. It is emphatic on enforcement of the “renewable purchase obligation”, leaving no scope for the State electricity regulators to be lenient with violators. It introduces a “take or pay” system by giving renewable power generators the “deemed generation” benefit. This means the producer is paid even if the electricity is not taken due to grid issues. It provides for compensation for distribution utilities for any premium paid for green power. While these measures provide a welcome boost to the sector, it is disappointing that other crucial issues — such as land acquisition at reasonable prices, involving local communities in project development, and incentives for distributed generation that could bring power to un- or under-electrified areas — have been left to “guidelines” to be formalised in future.

Missing in the discourse is a clear plan for resource assessment, which is critical, particularly to the wind industry. Today, the wind industry, faced with a 60,000 MW target, is left essentially groping in the dark as the wind resource data made available by the National Institute of Wind Energy are dated, based as it is on a tower height of 80 metres, when the industry has moved on to tower heights of 100 metres and beyond. The Act should have provided for wind and solar resource assessment, perhaps paving the way for private entrepreneurs to generate and sell data.

Regardless of these shortcomings, the RE Act does a lot of mine-clearing of the path towards the goal of generating 175,000 MW of power from renewable resources by 2022. However, the government has more work to do. The industry has often cited two major stumbling blocks — transmission infrastructure and the “off-taker” risk, or the perception of the ability of the buyer of green power to pay for it. As for the former, the Cabinet recently cleared a Rs. 8,548-crore proposal to build intra-State transmission infrastructure in seven States. The “transmission infrastructure” issue is thus being addressed, though it is doubtful if the infrastructure will be in place by 2022. The other issue, “off-taker risk”, which is based on the poor health of State-owned power distribution companies, is more vexing. The answer to that probably lies in the new Electricity Act, which seeks to engender a crop of private “supply companies”, to which a renewable energy generator could sell his power. But the passage of the proposed Act is under a question mark, given the vehement opposition of several States to it. To that extent, the renewable energy industry has one more major hurdle to cross.

Source: Business Line

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