A Review on the Impact of Renewable Energy Policies on Solar and Hybrid Sector

Abstract

Electricity consumption is one of the most important indices that decide the development of the nation. India has emerged as the country which has a huge scope of renewable energy. Hence it is important to have a favorable regulatory framework to promote renewables. Electricity is majorly powered by fossil fuel, and it does contribute to the problem of global warming which is why India is committed to decreasing the share of fossil fuel-based power generation by 40% by 2030. Indian policymakers initiated several reforms in the power sector to meet these objectives. A major turning point in electricity reforms was the Electricity Act 2003 which mandated the SERC to promote RE specific targets. These targets set by SERC known as Renewable Purchase obligations (RPO), mandate DISCOMS and other obligated entities like open access and captive consumers to procure electricity consumption through RE. The next push for renewables, especially for solar, came from the National Action Plan on climate change (NAPCC). As part of NAPCC, the Jawaharlal Nehru National Solar Mission (JNNSM) was launched in 2010 with the target of 20 GW installed solar capacity till 2022. In 2014, a revised solar mission was introduced with a target of 100 GW of solar installation by 2022. The latest revision in the target involves installing 50 GW of floating solar in addition to the 100 GW target. With these ambitious targets laid down by the government of India, it will require a strong regulatory framework. In initial stages to attract more investors in the solar industry, GoI had taken initiatives such as custom duty exemptions, tax benefits, Tax Holiday, Accelerated Depreciation. Benefiting from these policies the cumulative solar installations in India has reached 26 GW at the end of September 2018. However, policies for renewable have evolved over time. The ongoing issues such as ambiguities in applicable GST rates, safeguard duties applicable to the import of solar panels from China, volatility in lending rates are affecting the financial viability of solar projects. Another challenge the solar industry is hovering with is constantly dipping solar tariffs due to competitive bidding framework. It is necessary to have certainty in policies to bring stability in this sector, and the amendment in the electricity act is the first step towards it.