INTERVIEW UPENDRA TRIPATHY

Reduction in accelerated depreciation tax

benefit to hit renewable energy sector
TCA SHARAD RAGHAVAN

The renewable energy sector, especially wind energy, is suffering because of the reduction in accelerated depreciation tax benefit as
announced
in
the
Budg
Upendra Tripathy, Secretary,
Ministry of New and Renewable
Energy, told The Hindu in an interview. He said the government is
looking into why foreign banks
have not been lending to solar projects in the country though public
sector banks have been enthusiastic and private banks are beginning
to show interest.

Private banks are not lending to

solar projects. What is the reason?

In RE-Invest 2015, we got a huge response from the banks private,
public and multilateral. For example, the World Bank has given $500
million to SBI to lend to aggregators in rooftop solar. ADB is in the
pipeline to give $500 million for
rooftop solar to Punjab National
Bank. And we have got $1 billion
from KFW, the German bank.
Many banks think these are risky
projects. That perception is still
there but increasingly it is changing. If you look at investment, each
MW of solar costs Rs.5 crore and
this current financial year we have
already put 2,500 MW of solar. A
cumulative of 5,000 MW of solar
has been crossed now in solar
alone.
YES Bank, which is a small private bank, has not only given a large
loan for renewables they have also
come out with $500 million of solar
bonds, what they call green bonds.
Exim Bank has also come out with
green bonds. There has been a big
impetus because to get the 175 GW
by 2022, you need around $200 billion of investment, equity and loan
put together.
For the first time last year, the
government gave Rs.10,000 crore of
tax-free bonds for the renewable
sector. It went to NTPC, REC, PFC,
IRDA We are telling the multilateral banks World Bank, New Development Bank, ADB that whatever loans they are extending at a
global level, 15 per cent should
come to the renewable sector. If

you want to give a fillip to the sector, lending is crucial and credit is
vital.
Foreign banks are not giving to
the renewable energy sector and
we are looking into that. We have
requested the Department of Financial Services to put a request to
these banks to also actively participate. We are also hiring a consultant, a retired bank official, who can
go to all these banks and meet their
association president and persuade
them. We are trying to reach out to
them, we cannot force them.

Are solar tariffs becoming too low

for projects to remain sustainable?
The tariffs are what the industry
bids. Tomorrow they may be higher
than this. So far, it is a market-driven product and one cant interfere
in it.
If you look at the number of participants in these bids, it is quite
big. So, there is higher competition
and so the rates are low.
But then, price is also a product
of volume, how much you are tendering, where you are tendering,
how much sunshine is available
there and also the reputation of the
agency for example, NTPC is a
sovereign organisation, has large
reserves, there are no payment issues, so the prices can be low. The
point is each auction is unique.
Yes, the price is lower. It was
Rs.10 two years ago and Rs.18 in
2010. But declining prices are a factor of higher efficiency and is representative of the global trend.

Rooftop solar has not yet taken off

as expected. Is it because it is not as
economical on residential properties
as it is on corporate buildings?
The first thing is that I always request people not to look at solar as a
financial matter. Every megawatt of
solar that is generated, a few tonnes
of carbon equivalent is reduced.
Each megawatt of solar generated is
equal to 50 vehicles taken off the
road. And if 50 vehicles are taken
off the road, three people
will not die of respiratory
problems, particularly the
poor who live on the roadside. So, solar energy is not

merely a flow of electrons there

is a social story, a human story behind it. If you keep that view, then
even if it costs a little more, it is immaterial. Antibiotics are more costly but we take them. It is not a story
of electricity or cost, but a story of
our future.
Rooftop solar will also be a part
of home loans or home improvement loans. So any bank that is giving a home loan something private banks must be doing
rooftop solar is a part of it.
But having said that, rooftop is a
new area for us. We have a huge target of 40,000 MW by 2022. What
we have done in the first phase is
that we have been able to convince
the states to come up with net metering. Many states have been very
proactive. Delhi gives Rs.2 of Generation Based Incentive (GBI) for
each MW of solar energy generated
through rooftop. Karnataka gives
Rs.8 GBI. Other States have net metering you produce, you adjust
your own production against the
grids supply.

Why has wind energy failed to take

off in the country despite the huge
potential?
Out of our cumulative achievement
of 38,000 MW of renewable energy,
63-65 per cent is wind energy, around 26,000 MW.
It started early, unlike
solar, and was making good progress
but at some point the
accelerated depreciation was removed. So, then the
investment in the
sector went down.
And then accelerated
depreciation was reintroduced but the
investment

Rooftop solar will also be a part of home loans or home improvement loans.
So any bank that is giving a home loan something private banks must be
doing rooftop solar is a part of it.

did not pick up much. Still, this year

we will achieve our target of 2,500
MW of wind energy. Next year, we
have a target of 6,000 MW and we
are consulting the industry on how
much we can actually do. But now
the accelerated depreciation has
gone down to 40 per cent, as per the
Budget, which is also a challenging
issue.
But wind energy is cheaper in
some states costlier in others,
around Rs. 6 per unit. So people are
now looking at solar also as an alternative. But to promote it, we are
coming up with a new concept
called hybrid parks. We
looked at the solar resource
map of India and the wind
resource map and overlaid
them. We found that there
are some areas that are
rich in both wind and solar. Those are the areas
where we are coming up
with hybrid parks, which
will have both wind
and solar. We also
have found
that al-

most 30 per cent of the windmills

are very old and very small. They
were installed in the 1990s and
early 2000s. We have started a repowering policy where you can replace the oil, inefficient windmills
with new, heavier wind turbines
that are more efficient. That will also increase the wind capacity.

So, is there an argument for

increasing the accelerated
depreciation limit for the renewable
energy sector?
As the Secretary of Renewables, I
would love it. But these are decisions for the Budget and they keep
so many things in mind. From my
Ministrys point of view, though, we
will say that it is desirable, just and
fair but the Finance Ministry has its
own constraints.

Has there been any work done

regarding increasing Indias energy
storage capacity?
Storage is a must for us. Given the
variable nature of wind and solar
energy, storage helps a lot in bringing stability. But the cost is very
high, and is a strong deterrent. But
the cost of silicon batteries for cars
is coming down. We hope that the
cost will come down for other storage types as well. It is an area we
have to move in. We are thinking of
coming up with schemes where
storage is subsidised so that more
investment can come in.