India courts solar investors with dollar contracts plan

The baking days before the arrival of the monsoon, when much of south Asia swelters in daytime temperatures above 45C, may not sound the best time to boast the merits of the Indian sun. Last month 2,500 people are reported to have died during a heatwave. Even solar electricity stations are suffering from the reduced efficiency of their overheated photovoltaic cells.

But the government of Narendra Modi is accelerating its efforts to generate a substantial share of electricity from the sun, setting aside land, building transmission lines and this month floating a plan to attract foreign investors with supply contracts denominated in dollars rather than rupees.

Solar developers say the introduction of such contracts, which would protect investors from the expected depreciation of the rupee over the next 25 years, would overcome one of the last remaining obstacles to new investments and cement India’s position as the next big destination for renewable energy groups.

“The scale-up will happen extremely rapidly,” says Tejpreet Chopra, chief executive of Bharat Light & Power, which plans to quintuple its wind and solar output in India to 1,000 megawatts (1GW) in the next few years. “The good news is that at least the government is showing intent. In order to do this scale of projects, we’re going to need foreign capital.”

Piyush Goyal, the minister responsible for power and renewable energy, launched bold plans a year ago to provide electricity 24 hours a day for all Indians by 2019, partly from ever cheaper green power: the plan for the solar sector is to spend $100bn to raise capacity from just under 4GW today to 100GW by 2022. An estimated 400m Indians lack basic access to electricity. Coal remains India’s most important energy source, supplying more than half of all power stations.

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