Modi govt failed to bring policy certainty in renewable energy sector: CEOs

Success was promoting renewables, GST, Safeguard Duty doesn't dent optimism

The renewable energy industry has lauded the government for propelling growth in the sector but pointed out that inconsistent policy is a major hurdle.

In a survey done by Bridge to India with the chief executive officers (CEOs) of 41 Indian and international companies, 73 per cent are optimistic about growth prospects.

The CEOs have mentioned one of the key positives of the Narendra Modi government has been promoting renewable energy while the failure is policy instability.

Bridge to India is a leading consulting and knowledge services provider in the Indian clean energy market.

“The Modi government has failed in maintaining a consistent policy and business environment. Imposition of trade barriers and GST (goods and services tax) has added uncertainty and confusion,” said the report based on the survey. It further said the industry expected the new government to improve business execution and provide policy stability.

India is expected to add 80 Gw of renewable energy capacity in the next five years. The bulk capacity addition (47 Gw) is expected in grid-connected solar. Floating and grid scale storage are also expected to pick up pace, said the report.

“The most pressing issue for the industry is offtake risk, followed by challenges in land acquisition and uncertainty in the overall policy environment. Around 49 per cent of those surveyed felt that bidding in the sector is irrationally aggressive. The industry remains unenthusiastic about the prospects of domestic manufacturing. However, in comparison to last year, the outlook has considerable improved,” said the survey report.

Of the surveyed CEOs, 39 per cent are optimistic about the growth of the sector. The survey noted optimism is more than it was last year despite the imposition of a safeguard duty, GST and BIS implementation niggles, project delays, tender cancellations, a falling rupee and policy reversals.

Vinay Rustagi, managing director, Bridge to India, said: “Overall, the survey paints an optimistic picture for renewable energy sector growth. If measures for discom reform and network connectivity are put in place, we can expect much higher capacity addition in coming years. We also believe the sector enjoys broad cross-political support and there is unlikely to be retreat irrespective of who forms the government.”
 

Apart from the uncertain policy environment, the industry rated offtake risk as the biggest concern in the sector. It remains pessimistic about solar panel manufacturing prospects in India.

“This is understandable as all the government initiatives to promote domestic manufacturing – manufacturing linked tenders, CPSU scheme, KUSUM and safeguard duty – have failed to produce any positive results,” said the survey report.