Concerned with dwindling investor interest, the Union government plans to set up an inter-ministerial body to settle various issues faced by the green energy sector and attract billions of dollars in investments to successfully execute the world’s largest clean energy programme.
The proposed Renewable Energy Industry Promotion and Facilitation Board (REIPFB) will be set up along the lines of erstwhile Foreign Investment Promotion Board, which was tasked with handling foreign direct investment proposals and facilitating them.
REIPFB would “deal with challenges and issues being faced by renewable energy sector with the aim and objective to remove obstacles and difficulties which investors face in bringing investment to the sector," showed government documents reviewed by Mint.
The government is worried that India’s clean energy trajectory may be impacted with banks wary of lending to developers as they suspect the viability of projects that have agreed to sell power at rock-bottom tariffs. There are also issues regarding delay in payments by state-run power distribution companies (discoms), non-allocation of land to wind power projects, besides transmission and connectivity related challenges.
Power and new and renewable energy minister Raj Kumar Singh is expected to meet top industry executives on Thursday to discuss setting up of the new institutional mechanism to resolve the growing crisis in India’s clean energy sector.
The REIPFB will meet twice a month and “provide all assistance to the industry in project development and implementation", and “suggest steps for enhancing ease of doing business, increasing confidence of investors and reducing risk and problems of RE (renewable energy) sector".
The Union government is trying to allay investor worries amid criticism over a controversial attempt by the Andhra Pradesh government to renegotiate clean energy tariffs with developers. As part of the strategy, the Centre plans to set up a new tribunal solely to enforce power purchase contracts, creating an additional legal safety net for investors, Mint reported on Wednesday.
The proposed REIPFB will “liaise with various state governments and authorities to ensure smooth implementation of RE projects in the country", and “liaise with various financial institutions to enhance access to easy finance".
India is running what will become the world’s largest clean energy programme, with an aim of having 175 gigawatts (GW) of clean energy capacity by 2022. By then, it plans to add 100GW of solar capacity, which may need investments of around $80 billion, growing more than threefold to $250 billion during 2023-30.
The government wants to impress upon the global investor community on the sanctity of contracts in India amid a severe demand slowdown and liquidity crunch. Global investors in India’s clean energy space include Masdar, also known as Abu Dhabi Future Energy Co., Goldman Sachs, Brookfield, SoftBank, Canada Pension Plan Investment Board, Japan’s JERA Co., Singapore’s GIC Holdings Pte Ltd, Global Infrastructure Partners, CDC Group Plc and International Finance Corp.
“This mechanism will help allay investors’ concerns and problems. A portal will also be developed by the MNRE to receive the sector’s grievances and track and check the status and action taken," said a government official, requesting anonymity.
REIPFB will be headed by joint secretary (JS) in charge of solar sector in the ministry of new and renewable energy (MNRE). It will have JS rank officials from the departments of banking and financial services as members. It will also have representatives from state-run Power Grid Corp. of India Ltd, the Central Electricity Authority , Central Electricity Regulatory Commission, NTPC Ltd, Solar Energy Corp. of India, and state-run lenders Power Finance Corp., Rural Electrification Corp. Ltd and Indian Renewable Energy Development Agency.