New Delhi: Companies planning solar and wind energy projects should consider the entire lifecycle value of the project and not just upfront costs while choosing equipment suppliers, the US Export-Import Bank suggested, defending higher prices quoted by American equipment vendors.

US financing promised for renewable energy projects in India using American equipment has found no takers, since many project developers turn to cheaper goods from China and South-East Asia. India and the US are also battling at the World Trade Organization (WTO) over domestic content requirements in India’s solar energy projects.

The suggestion was made by Patricia M. Loui, member of the board of directors of the US Ex-Im Bank, who is currently in Delhi to attend RE-Invest 2015, India’s first global investors’ meet for green energy.

“When one talks about costs, we need to look at not just the upfront project cost, but rather value, and as I mentioned, our products are very innovative, meaning that they are more reliable and they last longer and are efficient. So, from that perspective, I would offer that American products have higher value than those products, which are being offered at low upfront costs. If a solar plant is there for 40 years, the value over the lifecycle is extremely critical analysis that I would urge more companies to do," Loui said.

India has substantially revised an earlier solar energy target of achieving 20,000 megawatts (MW) of capacity by 2022 to 100,000 MW. It plans to put in place 60,000 MW of wind power capacity by then. The government is expecting an investment of $200 billion in green energy projects. India’s National Action Plan on Climate Change recommends that the country generate 10% of its power from solar, wind, hydropower and other renewable sources by 2015, and 15% by 2020.

Last month, US president Barack Obama committed $2 billion by the US Trade and Development Agency (USTDA) for developing green energy projects in India, in addition to a $1 billion medium- and long-term guaranteed loan from the US Ex-Im Bank, which was inked in November last year.

On competition from Chinese manufacturers, Loui, who leads the bank’s efforts to promote US exports to Asia, said, “It is a global market place. There are many companies that produce products but I think...American firms on a broader scale are known for their innovation, their product quality and reliability. And frankly, we are good partners. We are here for commercial purposes."

There is growing interest from US firms to set up factories in India given the opportunities. US-based SunEdison Inc. recently said it plans to build a solar photovoltaic manufacturing facility in India in a joint venture with Adani Enterprises Ltd with an investment of around $4 billion. Also, First Solar Inc., which builds large solar farms mainly for utilities, is exploring opportunities in local manufacturing in India.

“We are not here to look at resources. In the commercial world, its not only return on investment. It has to be win-win situation or you lose the customer relationship. So, I think we compete with many other countries and many of our exporters compete with many other exporters. We are very proud of what American firms represent," Loui said.

Interestingly, a WTO dispute settlement panel on 3 February started hearing US complaints against India’s domestic content requirements on procurement of solar cells and modules under the Jawaharlal Nehru National Solar Mission programme.

The world’s top two polluters, US and China, signed a climate deal in November, wherein the US will cut emissions by 26-28% below its 2005 level by 2025 and China will reach the peak of its harmful carbon dioxide emissions around 2030. India, too, is gearing up to meet the climate change challenge.

“Our chairman was here in November and he announced an MoU (memorandum of understanding) with IREDA (Indian Renewable Energy Development Agency). We are looking at how we can through IREDA potentially fund the individual state projects and in addition, President Obama announced $5 billion facility. So, we are eager to move forward and help the government and we are excited about India meeting that 100,000 MW target," Loui said. IREDA is to facilitate US private sector investment in Indian clean energy projects.

A 17 February report by the Climate Group and Goldman Sachs Center for Environmental Markets said, “India currently has 77 million households (about 360 million people) who lack adequate access to grid-electricity, and another 20 million underserved households (approximately 95 million people) who receive less than four hours of electricity in a day. While grid connectivity is expected to improve over the next 10 years, at the current rate of grid expansion, urbanization and population growth, 70- 75 million households will still lack access to grid electricity by 2024. Since 90% of these households live in rural areas, a significant reduction in the 83 million rural households who are currently not served or underserved by the grid is unlikely."

India, the world’s third-largest emitter of greenhouse gases, has secured pledges from 213 companies for setting up a renewable energy capacity of 266 gigawatts (GW) over the next five years. India has an installed power generation capacity of 255,013 MW. In the run-up to the Paris summit, much international attention is focused on India’s plans.

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