India can solve its energy problem within 18 months by putting in place thermal capacity of about one lakh mega watt (mw), which is lying incomplete and blending it along with about 250,000 mw capacity available as of today, said Shri Suresh Prabhu, chairman, Advisory Group for Integrated Development of Power, Coal and Renewable Energy at an ASSOCHAM event held in New Delhi. He was speaking at the inaugural of a seminar on ‘Financing & Regulatory issues in Renewable Energy’ organised by The Associated Chambers of Commerce and Industry of India (ASSOCHAM).
“If we use this opportunity now we can address the energy problem in a very significant way,” he added.
Terming financing as an extremely challenging issue being faced by the renewable energy sector, Shri Prabhu said, “We need $7.5 billion of equity and $22.5 billion of debt and to make that happen we need to put in some sort of an instrument in place.”
“Equity is going to be extremely challenging unlike debt financing,” added Shri Prabhu.
He suggested that the Government should transfer the clean energy cess worth Rs 100 per tonne being collected from Coal India to the Indian Renewable Energy Development Agency (IREDA) as they could leverage this by nine times as part of capital adequacy norms for non-banking financial companies (NBFCs).
“So if we give them something like Rs 20,000 crore they could easily have another Rs 1,80,000 crore which they can borrow from the market because 1:9 is possible for them as NBFCs could leverage the capital by nine times and this is something which they should be doing by using IREDA more effectively,” said Shri Prabhu.
“We need to access lot of international finance and this is something which is possible through climate finance because there are a large number of entities both private and public who have interest to promote renewable energy because of various reasons,” added Shri Prabhu.
He emphasised upon using innovative ideas and mechanisms to create new instruments to finance the ambitious programme of promoting renewable energy and as its spinoff benefits are huge there is a need to put it in place.
He also said that use of tax as an instrument to discourage non-renewable energy is undesirable for India as it would push the energy costs upwards.