Modi's 2022 Renewable Energy Target Requires Four Times As Much Money As Defence Budget
“We have a target for renewable energy generation of 175 Gigawatt by 2022. We have got off to a good start with nearly 12 GW likely to be installed by 2016, more than three times the current capacity,” Prime Minister Narendra Modi said during the inauguration of the Indian Pavillion at COP21, Paris.
Of the target capacity, 100 GW would be from solar power, 60 GW from wind, 10 GW from biomass and 5 GW from small hydro power, according to the ministry of new and renewable energy.
“In order to achieve the proposed capacity of 100 GW target by 2022, the overall investment required would be around Rs 600,000 crore ($89.88 billion) @ Rs 6 crore per MW at the present cost,” power minister Piyush Goyal said in his reply to a question in the Rajya Sabha, the upper house of Parliament, referring to the solar energy target.
The central government’s budget allocated for solar energy the financial year 2015-16 is Rs 2,708 crore (or 0.45% of the required investment), according to the minister’s own statement in the same reply.
Capacity addition of renewable energy between 2002 and 2014 has been at a compound annual growth rate (CAGR)—the average year-on-year growth rate—of about 20%.
India’s installed capacity of renewable energy is likely to reach 147 GW by 2020, according to a report by the International Energy Agency.
It would need $120 billion (Rs 801,065 crore) in capital investment and $40 billion (Rs 267,022 crore) in equity to achieve the ambitious target, according to information released by the ministry of new and renewable energy.
The $160 billion (Rs 10.68 lakh crore) needed over the next seven years (until 2022)--at an average of $23 billion (Rs 153,784 crore) a year--to meet the stated goal is equivalent to over four times the country’s annual defence spending, and over ten times the country’s annual spending on health and education.
How India plans to meet the target capacity
Green Energy commitments for 266,000 MW (266 GW) were received during the RE-Invest conference held in February 2015.
|Clean Energy Plans|
|Foreign investors (14 companies from seven countries)||58 GW|
|22 Public Sector Units (PSUs)||18 GW|
|257 Private Limited Companies||190 GW|
Source: MNRE Press Release
As many as 27 banks have submitted their commitments for financing 72 GW renewable energy projects.
Earlier this year, the US had committed to support India’s efforts in the renewable energy sector with a $4 billion (Rs 26,702 crore) deal, IndiaSpend reported.
India has signed a Memorandum of Understanding (MoU) with Germany “to expand bilateral development cooperation in the field of solar energy by increasing use of solar energy in India through technical as well as financial cooperation”.
As a part of this MoU, Germany “would provide concessional loans in the range of one billion euro (over Rs 7,200 crore) over the next five years”.
The government’s investments may not necessarily be as capital but perhaps as subsidies and tax-free bonds.
For instance, of the 100 GW target in solar power capacity, 40 GW would be from rooftop solar panels—an endeavour which the government has been supporting through the subsidy route.