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Energy Conclave 2006

Presentation by Debashish Majumdar, Managing Director Indian Renewable Energy Development Agency Limited New Delhi July 27, 2006. Energy Conclave 2006. Implementing the Integrated Energy Policy: The Way Forward.

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Energy Conclave 2006

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  1. Presentation by Debashish Majumdar, Managing Director Indian Renewable Energy Development Agency Limited New Delhi July 27, 2006 Energy Conclave 2006 Implementing the Integrated Energy Policy: The Way Forward

  2. Need for Policies in RE Sector • To create markets • To reduce risks • Provide acceptable rates of return • Create conditions for sustainable & profitable industry

  3. What is required ? • Long term regulatory frameworks • To create conducive investment climate • Niche public finance mechanisms • To address specific technology gaps / barriers • To aid commercialization through project development • End-user Finance Mechanisms • Carefully designed public support initiatives

  4. Regulatory Issues affecting Growth of RE Sector • Frequent change in policies • Tariff not conducive for renewable energy • Third Party sales discouraged in most States. • High wheeling charges. • Cost of infrastructure development, evacuation facilities and transmission lines left to be borne by developers. • Late or Non-payment by Electricity off-takers. • Government / forest land issues.

  5. Renewable Energy - Key Obstacles to Growth • Absence of assured customer / market • All RE projects are : • Small in size • Widely dispersed in remote locations • Lacking infrastructure (evacuation facilities, roads etc ) • Generally high cost ( not factoring positive environmental and social impacts) • 90% of small hydro potential is in hilly areas which have no industry – No demand. • Only buyer SEBs – Not willing to pay more for RE Power.

  6. Renewable Energy - Key Obstacles to Growth • Absence of aggregating agency / trader. • All small RE projects are forced to market their products (electricity) directly to monopoly buyer (SEBs) – Buyer’s Market. • Higher cost of generation due to : • Small size ( no economies of scale) • Disadvantaged locations • Lack of adequate capital at affordable cost. • Absence of National Renewable Energy Policy.

  7. The Way Forward - Suggestions • Policies to be consistent and valid for long term • Fiscal benefits to be linked to performance preferably through tradeable credits. • State Nodal Agencies to develop shelf of “Bankable Projects” complete with all necessary clearances to be made available to private investors through suitable bidding mechanism. • Special Awareness & Focused Training Programmes on RETs for senior members of SERCs & SEBs. • Availability of adequate and affordable resources.

  8. Resource Mobilization for RE Sector • Setting up of Renewable Energy Development Fund (REDF) • Cess of Rs 5/MT Coal • Cess of Re 1/LPG Cylinder • Cess of 1 paisa / Kwh on conventional electricity generation • Green Stamp Duty on IPOs • Setting up of RE Innovation Fund – to provide Venture Capital for taking R&D and demo projects to commercialization. • Establishment of specialized Assets Re-construction Company – to tackle NPA & recovery. • IREDA to be converted to Apex FI – similar to NHB, NABARD etc. • MoEF, MoRD to contribute to IREDA’s equity.

  9. Conclusion • Conducive policies are the strongest drivers for market development. • Preferential treatment of renewables is important for creating “critical mass”. • Availability of specific funds for RE development and dedicated institutional mechanism for financing of RE sector is critical. • Boosting of private sector confidence required for larger investments • Strong political will and commitment required in the form of Renewable Energy Policy Statement or Renewable Energy Act.

  10. Thank you www.iredaltd.com

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