Govt to ask RBI to remove priority lending limit for renewable energy sector

In an attempt to further boost India’s emerging green economy, the ministry of new and renewable energy (MNRE) would try to impress upon the Reserve Bank of India for removal of the priority sector lending limit for the renewable energy sector, the government said in a statement on Monday.

This comes in the backdrop of the National Democratic Alliance (NDA) government’s agenda of providing reliable, sustainable and affordable electricity to the masses in its second term and focusing on changing the energy mix towards green energy sources.

“This will encourage the PSBs (public sector banks) to lend more for RE (renewable energy) projects and help RE developers access easy finance,” the MNRE ministry said in a statement on Monday after a review meeting held by power and new and renewable energy minister Raj Kumar Singh.

The meeting was attended by officials from MNRE, Department of Economic Affairs, Department of Expenditure, Department of Financial Services, Department of Revenue, public and private sector banks and financial institutions.

India is running the world’s largest renewable energy programme and plans to achieve 175 gigawatts (GW) of renewable energy capacity by 2022 as part of its climate commitments. The government plans to award a mammoth 100 GW of solar and wind contracts by March 2020. Given India’s ambitious target of 175GW of clean energy capacity by March 2022, the government’s strategy is to complete the bid process by March 2020 so that developers have the time need to construct these projects.

“In the meeting Shri RK Singh also asked the Banks/Financial Institutes to categorize RE as separate sector different from power sector so that funds would flow to RE projects…The Minister also requested banks to come forward to lend to RE sector,” the statement added.

India has witnessed a record low solar tariffs of ₹2.44 per unit. India’s wind power tariff also fell to a record low of ₹2.64 per unit. Of the targeted 175GW of clean energy capacity by 2022, 100GW is to come from solar projects. Of this, 60GW will be from ground-mounted, grid-connected projects, and 40GW is to come from solar rooftop projects. Wind power projects are to contribute 60 GW.

“On the issue of delays in land acquisition for RE projects, the Minister said that SECI will be tying up with State Governments for the land. As the land will be on lease, therefore there won’t be any upfront payment for the land. It will also tie up transmission while floating bids. Banks/Financial Institutions were asked to tie up with SECI for offering predetermined loans to successful bidders,” the statement added.

Some of the marquee schemes to help India emerge as a clean energy champion include the national solar mission, solar parks, rooftop solar projects, biomass, biogas and small hydro programme.

“Discussions were held about the GST issues on RE equipments/ components and Dept. of Revenue was requested to place appropriate proposal before the GST council. The issue of inverted duty structure also came up for discussion during the meeting. The minister said that every measure need to be taken to promote manufacturing in RE sector in the country, including corrections of duty structure and approval of a scheme to provide capital subsidy,” the statement added.