The Narendra Modi-led government’s ambitious plan to provide 24x7 power to all in the country by 2019 would involve investments of around $400 billion (about Rs 24 lakh crore) in India’s energy sector.
“I am looking at 1 billion tonne coal production, 100 giga watt (GW), or 100,000 mega watt (MW) of solar power capacity and investments of about $50 billion in the transmission and distribution segment in the next five years,” power and coal minister Piyush Goyal said at an event organised by the Confederation of Indian Industry (CII) on Saturday.
Around $100-billion investments in renewables alone is expected over the next 4-5 years. This part, thermal power generation, nuclear and hydel power addition will also attract sizeable investments.
“A $400-billion plan with fair returns for investments would ensure 24X7 power and make India the capital of clean energy,” a CII statement said citing Goyal.
The minister also highlighted the need to revive stranded power projects, especially gas-based power ones to create a balance of base and peak power. At present, it is estimated that 1.32 lakh MW of coal and gas-based power projects, involving investments of Rs 6.2 lakh crore, are stranded for various reasons including fuel shortages and financial constraints.
The power ministry is working with the finance ministry to kickstart stressed power projects.
Steps to ease movement of coal from mines to power stations have been initiated, Goyal said. These include increasing the number of rakes (carrying coal) involving an investment of $ 1billion and rationalising coal linkages to optimise costs and save almost Rs 6,000 crore.
Reforms are also being planned for ailing distribution companies. The government is providing provisions whereby the entire discom set up will be unbundled. While there will be a government distributor to ensure that power is provided to the weaker section of society, competition will be introduced and the private sector role in the sector will be expanded.
“The government is hoping to come forward with a clear cut roadmap on how to achieve the 100-GW solar target at a global conference on renewable energy (RE-INVEST), which is scheduled in February 2015,” the minister said.
Discussing the innovative financing models and the new framework that the government is now evaluating, he said: “Innovative financing models have helped make solar energy a viable business proposition. We are looking at graded tariffs to achieve grid parity; provide investors a fair return on investment over the lifecycle of the project and bring in an entity to provide power purchase assurance to investors.”
Emphasising on the business case for investments in renewable energy, particularly for large investors, Goyal said: “Factoring in accelerated depreciation gains and leveraging the strong balance sheets to avail the benefits of lower interest rates will help reduce the cost of solar power downwards of `5, on a par with conventional power. This can change the whole economics of the business.”