It’s about time India’s Early Investors in Clean Energy Receive Benefits

As every part of the world moves toward a clean environment, one of the standard resolutions is transitioning towards clean and renewable energy sources by most countries. Consequently, the International Energy Agency (IEA) is registering many changes in the energy sector. One such change is the energy mix across the world. Another one is the contribution of renewable energy into the energy basket, which has increased to 24%. Many countries, including adopting supply from sustainable energy sources, could see the percentage rise to 30% come 2024.

India is not lagging in this either. It aims to reduce the dependency of the country on energy sources such as liquid hydrocarbon and coal. One way of achieving that is continuously building additional renewable capacity. Its efforts have borne fruits because, for the last ten years, the power has increased by 65 gigawatts (GW). Since it was 17.5 GW a decade ago, the capacity is slowly becoming considerable, and the progress is also undeniably impressive. With that pace, and if possible, even a better one, the dependency on conventional energy sources will reduce significantly, no doubt.

One of the factors contributing to this milestone is the promotional regulatory and market structure. The renewable energy (RE) wouldn’t have recorded such improvement if it was not for such a progressive road map. However, consumers are yet to enjoy some benefits despite paying a lot to promote RE generations. It seems to be a perfect time for that to change since a lot has also changed over time. After all, the generation costs of conventional coal-based energy are now more expensive than those of its counterparts, wind and solar.

The existence of the renewable purchase obligation (RPO) is the binding element between traditional and RE power sectors. The likes of Discoms and various captive power plants are the obligators. To oblige, they have two choices; either purchase a renewable energy certificate (REC) or electricity from specific green sources. The RECs’ roles were to promote renewable energy and ensure that obligators without resources such as 270 days sunshine, roofs, and land to generate solar energy comply with the RPO.

Currently, the cost of renewable energy is lower than that of purchase. Consequently, renewable energy developers will have to charge their consumers a reasonable amount. The price of a unit of Solar REC costs Rs. 2.25. On the other hand, the same solar power, coupled with a REC certificate, costs the buyer about Rs. 2.5, which is a price that has not changed since Financial Year 17-18. Given the changes over time, consumers can only hope that the prices will reduce. After all, even the production cost has reduced.