SUN Group’s Uday Khemka on India’s renewable rollout challenges
Uday Khemka, Vice Chairman of SUN Group and Clean Energy Finance Forum ChairmanSUN Group Vice Chairman and Clean Energy Finance Forum Chairman Uday Khemka spoke about the challenges faced by the Indian renewable rollout over the coming years, at a recent RE100 event in Delhi hosted by The Climate Group:
“It’s both a very exciting and challenging moment for India’s renewable energy rollout. If you look forward 10 years from now I think there will be a vast revolution in this sector, in terms of where energy is produced, stored and consumed.”
“However, I see it as being a transitional moment. It’s transitional because we’re no longer in the world where subsidies are driving the sector. Renewables in India are so deeply beyond grid parity, with solar undercutting thermal coal by selling into the grid for 2.44 rupees (US$0.038) per kilowatt-hour, it’s entirely rational for every company in the country to consume renewable power.”
“I’m extremely confident about how the sector will look five years from now. But there are also challenges and I think the next five years are delicate and have to be thought of with great nuance to ensure that there are no unnecessary delays to the low-carbon transition.”
“The eco-system around renewable procurement is still emerging and there remain issues with the alignment of power distribution companies for example. If we are going to undercut the best customers of the distribution companies with renewables, we may have the same issues in India that we’ve seen in other countries.”
“Bringing the distribution companies in to be partners of this inevitable revolution is therefore absolutely critical. Many in the sector do not have the time or the leadership to take on this rather thorny challenge, but I think for all our sakes we have no option but to do so.”
“There are also technology issues, such as the fact that battery costs are coming down but have not yet hit that magical point where you have truly non-intermittent energy. The rollout of battery storage is in a mezzanine period where corporate procurement is going to shoot up dramatically, but not at the speed and pace required to solve the current environmental issues.”
“Also finance is critical because India as a country is undercapitalised. The first generation of investment that’s gone into funding this area has either come from corporate entities or private equity investors whose return expectations are unsustainable. We need to bring in long-term institutional capital from pension funds and insurance companies, whether domestic or international, that have a much lower cost of capital.”
“The key thing is that we don’t create chaos in this interim period and delay the low-carbon future by the wrong forms of governmental, corporate or regulatory intervention.”