India has made commendable progress in scaling up renewable energy in recent years. To achieve its ambitious target of 450 GW by 2030 and meet the energy needs of its growing economy, it is crucial that it ensures long-term stable and predictable policies. Only then will there be increased confidence among private players to invest significantly in renewable capacity addition. Some key measures that India can take are:
Formulate a comprehensive long-term national renewable energy policy with clear long-term goals for at least 10-20 years. The current policies have 5-year targets which do not provide enough certainty. A long-term policy will signal intent and direction. It should lay out a planned transition away from fossil fuels over 20-30 years. This will boost investor confidence that policies will remain stable over the long run.
Continue with schemes like competitive bidding through reverse auctions but ensure auction targets are well-staggered over 5-10 years to avoid boom-bust cycles. This will provide a steady pipeline of projects for developers and component manufacturers to invest in. Flexibilities may be introduced to factor in future cost reductions and technological changes.
Phase out all direct subsidies and move to a fixed-feed in-tariff (FIT) regime determined through auctions for different renewable resource zones. Staggered long-term FIT contracts of 15-20 years should provide assured returns. This will reduce risks for investors and banks, and attract more competitive bids. Contracts can be linked to inflation to ensure tariffs remain attractive.
Establish an independent national Renewable Energy Regulatory Commission on the lines of electricity regulators. This will provide long-term regulatory certainty and consistency in policy implementation. It can oversee auction designs, Power Purchase Agreements (PPA), grid connectivity etc. to make the system more transparent and attractive.
Simplify and streamline clearances and approvals through a single-window system. Liaise with state governments to expedite land acquisition, transmission infrastructure development and grid connectivity approvals. Ensure dispute resolution mechanisms are strong to reduce delayed payments risks. This will significantly reduce project implementation timelines.
Bring tax and financing reforms through incentives like accelerated depreciation, concessional duties on equipment, green bonds etc. to make financing renewable projects more competitive vis-a-vis fossil fuels. Offer Viability Gap Funding for projects in resource-rich areas lacking infrastructure to kickstart development.
Build capacity through training programs to develop a skilled local workforce for maintaining renewable energy systems. Create dedicated credit lines and financing packages through institutions like IREDA and Green Energy Corridor projects to scale up R&D, manufacturing and project development capacity within India over the long-run.
Put in place robust mechanisms for forecasting and scheduling of renewable power. Invest heavily in modernizing the grid, energy storage and developing a national renewable energy grid to balance variability through inter-state connectivity. Stringent quality control and technical standards can boost consumer and installer confidence.
Promote domestic and global green finance through registration on global carbon exchanges, emission trading and labeling programs. Multilateral cooperation on just energy transition programs can leverage greater international financing support.
Undertake sustained IEC campaigns to build wider public and political support for long-term policy consistency. This will reduce policy risks from changes in government priorities over time. Long-term visibility and policy-level support is vital for attracting significant private investment in building new zero-carbon energy infrastructure and supply chains in India.
Implementing these comprehensive measures can power India’s renewable energy transition by providing the predictability, bankability and enabling policy ecosystem essential to unleash massive private sector involvement over the coming decades. With consistent long-term policies and a conducive investment environment, India has enormous potential to emerge as a global renewable energy leader and achieve its ambitious climate and energy goals through collaborative efforts of the government and private sector. This will lay the foundation for a more sustainable, secure and prosperous low-carbon future energy system.