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Updated: July 28, 2013 10:55 IST

Energy slowdown

Sujay Mehdudia
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Wind energy: Long-term potential. Photo: A. Shaikmohideen
The Hindu Wind energy: Long-term potential. Photo: A. Shaikmohideen

On the cards is sluggish growth in the renewable energy sector in the short-term, says a report

India, along with other global entities, faces the prospect of sluggish growth in the renewable energy sector with wind energy facing a slowdown due to removal of accelerated depreciation subsidy and confusion regarding generation-based incentives.

Leading consultancy firm Deloitte, in its report, has said that global investments in renewable energy sector will continue to decline in the short term. Deloitte India's senior director Debasish Mishra said, “This was due to lack of implementation of Renewable Purchase Obligation [RPO] by the distribution utilities and designated consumers. There is a slowdown particularly in the wind sector...”

However, the report noted that the prospects for global renewable energy industry would be attractive in the long term. About 118 countries have renewable energy targets in place and the demand for clean energy is also on the rise. Fossil fuels received almost twice the amount of government-funded support than the total amount of public and private sector investment in renewable energy in 2012. This equates to a total of $523 billion in subsidies provided worldwide, in contrast to the $269 billion of total investment in renewable energy in 2012, the report states.

The report expects renewable energy investments in the long term to remain intact in India as well, outlining five crucial areas where planning and decision-making in the near term will be key, including bridging the cost disparity gap with fossil fuels. 

It says shale gas revolution has created new uncertainty for the near-term investment prospects of renewable energies. There is no easy answer to the question of how to mitigate this risk or otherwise endure the revolution. In some ways, it is unavoidable: growth in the renewable energy sector is not likely to increase while gas prices are as low as they are. Further, it states in many cases, the key deterrent to investment is the lack of regulatory frameworks suitable to ensuring economic returns. This leads to the question of whether it is more economical to upgrade existing energy infrastructure, build new facilities on the foundation of the existing infrastructure, or invest in the new infrastructure of the ‘Third Industrial Revolution’. 

“It is important for utilities, investors, developers, and governments to understand the evolving renewable energy landscape so that they have the long-term context for the short-term decisions they must make,’’  Deloitte Touche Tohmatsu Ltd Global Leader (Renewable Energy), Jane Allen, said.

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