WASHINGTON: With India setting an ambitious target of generating 175 gigawatts (Gw) of clean energy by 2022, a top US official said that India has the potential to be “a change agent” for the rest of the world in the renewable sector though the transformation process is going to be tough.
“India could really be a change agent for the rest of the world in the renewable energy sector if they get it right. So we have a vested interest in helping them get that right,” Deputy Assistant Secretary of State for Energy Transformation Melanie Nakagawa said.
And as India embarks on the $1 trillion project to build its infrastructure from road to ports, she said it is a great opportunity for the world, “to showcase” India as a country that gets the sustainability future right. But at the same time, she acknowledged that it is going to be tough.
“I think that there’s a story to be written there as they get closer to it but it’s going to be tough.I mean it’s going to take not just the political will, but it’s going to take the reforms and the policies needed to actually see this possible future happen,” she said.
Noting that Indian government needs $100 billion in investment including $70 billion of debt financing to meet their 175 gigawatt target by 2022, the US official said those numbers can’t be met with public finance alone. And necessary reforms are needed to attract private investment.
“India’s commitments on the 175 gigawatt renewable energy target by 2022, their commitments on solar, their commitments also in the finance infrastructure space, this all makes it a really impressive political will, signal and political will,” Nakagawa said.
India has set itself an ambitious target of generating 175 gigawatt of power by 2022 from renewable sources that includes 100 Gw from solar, 60 Gw from wind, 10 Gw from biomass and 5 Gw from small hydroelectric project.
India and the US are working closely together in this field. The US-India Clean Energy Finance Task Force which was established in September 2015 has had three meetings so far.
This is a government-to-government task force focused on clean energy investment and finance.It’s complimented by a private sector led task force called a Clean Energy Finance Forum, the which is led by Uday Kemkha and SunEdison.
The task force, she said, has proposed three recommendations for how the US can work with India on getting to scale clean energy projects. The three proposals on the table include standardizing power purchase agreements; first loss facility and looking at the idea of warehousing and securitization for renewable energy projects.
“This is all about reducing project risk in the renewable energy space; different ways you can reduce project risk,” the US official said. The first loss facility helps get at reducing that risk, she observed. The idea of warehousing and securitization of renewable energy project assets is sort of bundling smaller scale projects into a larger project.
“This is a government-to-government dialogue on a pretty technical issue, but one that is really fundamental to how you would actually see scalable investment happen in India in the renewable energy space. Because these are some of the most systemic and problematic barriers to the larger scale investments that are needed to hit the renewable energy targets,” she said.
According to Nakagawa, the Task Force is discussing just the enabling environment from a finance perspective. “What we’re looking at is the specific window of project based investment for the renewable energy sector and what are the impediments to that,” she said.