Macro lessons for indian energy infrastructure – the sentinel k electric company

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Higher oil prices, the consequent inflationary pressures and a weaker rupee have dominated recent news headlines. While short-term measures to deal with these macro-economic trends are essential, it is also necessary to look at the long-term structural changes required to bring about stability in the Indian economy and reduce exposure to the vagaries of macro-economic trends.

Environmental concerns alone do not drive India’s renewable energy push today: Economic and financial compulsions are even more critical. Policies have helped expand the sector, but figures such as an expected $105 billion crude oil import bill for the country for the financial year 2018-2019 (according to the Oil Ministry) give us an idea of the urgent need to further reduce our dependence on imported fossil fuel and find alternative sources of energy.

For “energy independence”, renewable energy is the elixir that the country needs and it will mean addressing more significant policy issues and creating a policy framework that supports “energy independence”, factoring in a multitude of elements.

Critical evaluation of such questions will help frame coherent policies across the energy spectrum. Weighing competitive advantages of one policy versus another to create an overall framework that is consistent will help expedite renewable energy creation.

With the expansion of renewable energy capacity, it is essential for the energy industry and the government to take stock of the risk of stranded thermal power assets. The primary concern is how do we deal with thermal plant assets that aren’t financially viable any more.

As renewable energy increasingly becomes a greater source of energy at competitive price levels, the risk of stranded thermal plants goes higher. Unviable thermal power plants lead to more stranded assets, thereby adding to the Non-performing assets (NPAs) for banks. Atal and Shrimali hold that investors “perceive renewable energy power investments to be less risky than fossil fuel power investments”.

The government needs to think of the long-term ramifications of the growth of renewable energy on existing thermal power plants and any new thermal power plants in the pipeline. Given the long-dated nature of power plant assets, closer scrutiny around asset viability is warranted to avoid a build-up of more NPAs.

India has made significant progress over the last decade in the renewable energy sector. However, given the rising energy needs and the dependency on energy imports, now is the time to push the energy “independence” agenda further and faster. Greater policy clarity, consistency in policies and a focus on the broader economic mandate are urgently needed. (IANS)

Higher oil prices, the consequent inflationary pressures and a weaker rupee have dominated recent news headlines. While short-term measures to deal with these macro-economic trends are essential, it is also necessary to look at the long-term structural changes required to bring about stability in the Indian economy and reduce exposure to the vagaries of macro-economic trends.

Environmental concerns alone do not drive India’s renewable energy push today: Economic and financial compulsions are even more critical. Policies have helped expand the sector, but figures such as an expected $105 billion crude oil import bill for the country for the financial year 2018-2019 (according to the Oil Ministry) give us an idea of the urgent need to further reduce our dependence on imported fossil fuel and find alternative sources of energy.

For “energy independence”, renewable energy is the elixir that the country needs and it will mean addressing more significant policy issues and creating a policy framework that supports “energy independence”, factoring in a multitude of elements.

Critical evaluation of such questions will help frame coherent policies across the energy spectrum. Weighing competitive advantages of one policy versus another to create an overall framework that is consistent will help expedite renewable energy creation.

With the expansion of renewable energy capacity, it is essential for the energy industry and the government to take stock of the risk of stranded thermal power assets. The primary concern is how do we deal with thermal plant assets that aren’t financially viable any more.

As renewable energy increasingly becomes a greater source of energy at competitive price levels, the risk of stranded thermal plants goes higher. Unviable thermal power plants lead to more stranded assets, thereby adding to the Non-performing assets (NPAs) for banks. Atal and Shrimali hold that investors “perceive renewable energy power investments to be less risky than fossil fuel power investments”.

The government needs to think of the long-term ramifications of the growth of renewable energy on existing thermal power plants and any new thermal power plants in the pipeline. Given the long-dated nature of power plant assets, closer scrutiny around asset viability is warranted to avoid a build-up of more NPAs.

India has made significant progress over the last decade in the renewable energy sector. However, given the rising energy needs and the dependency on energy imports, now is the time to push the energy “independence” agenda further and faster. Greater policy clarity, consistency in policies and a focus on the broader economic mandate are urgently needed. (IANS)