New Delhi: State-run Solar Energy Corp. of India (SECI), formed in 2011 with charitable objectives, will be converted into a growth-oriented commercial company that will generate and sell solar power and develop other sources of renewable energy, the Union cabinet said Wednesday.
With an eye on expanding India’s renewable energy sector and streamlining it, the cabinet also approved renaming SECI as Renewable Energy Corp. of India (RECI).
The move will result in the company becoming a self-sustaining and self-generating organization with its own solar power plants that will generate and sell power. It will also lead to the company expanding activities in other segments of solar power, such as manufacturing of solar products and materials.
The decision to convert SECI from a Section 8 company to a Section 3 one under the Companies Act, 2013, was taken by the cabinet led by Prime Minister Narendra Modi at a meeting on Wednesday.
Section 8 provides for creation of companies with charitable objectives, prohibiting commercial activity and business growth.
In comparison, Section 3 provides for companies mainly for commercial activities that will help the company grow.
“A Section 8 company can only engage in activities of promotion of commerce, art, science, social welfare, sports, education, research, religion and charity, but not commercial activity leading to trade, buying and selling resulting in profit and distribution of dividend," the government explained in a statement.
The cabinet last week formally approved a decision to increase India’s solar power generation target from 20,000MW by 2022 to 100,000MW by the same year.
The National Democratic Alliance (NDA) has been pushing for growth in India’s renewable energy sector. India’s installed renewable power capacity is 35,776MW, of which the share of solar power is 3,743MW.
Once the firm is renamed, it will expand its scope of activity beyond solar power to take up development of all kinds of renewable energy sources such as geothermal, off-shore wind and tidal.
The decision to enlarge the scope of SECI’s activities covering all renewable energy sources was taken “with a view to provide a comprehensive and optimized solution for generation of renewable energy integrating various renewable energy sources".
“The generation profile of solar, wind and small hydro has complementarity, and generating power from these sources is likely to be more uniform. This will also reduce stress on transmission and distribution networks, resulting in better grid management," the cabinet statement said.
Registered in September 2011, SECI has initiated activities for setting up solar power plants, as also for the promotion and commercialization of solar energy technologies. For the first time, during the last financial year, SECI made a profit of about ₹ 12 crore. It is expected to touch the profit mark of around ₹ 300 crore this year.
Experts said the government’s move was long pending but were unsure about its effect on India’s manufacturing capability in the sector.
“We have argued that SECI needs to be made more strategic. It has a dual role—of an investor and of an intermediary to sign the contracts with other project developers from the government. For now, the move signals SECI having a more central role in the overall solar ecosystem in India," said Arunabha Ghosh, chief executive officer of Council on Energy, Environment and Water, a policy research institute.
“As per our calculations, to meet the 100GW target we would need to import $36 billion worth of solar panels and modules (given our current manufacturing capacity). But if built up incrementally, we can bring down imports to $16 billion. So, there is a significant opportunity to boost manufacturing."