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MoU between France and India to Boost the Local Renewable Energy Market

IBEF, Knowledge Centre

Apr 15, 2021 08:26

In March 2021, the Union Cabinet of India approved a memorandum of understanding (MoU) on renewable energy cooperation between India and France. The MoU, which was originally signed in 2018 between India’s Solar Energy Corporation of India Limited (SECI), France’s Commissariat a l'Energie  Atomique et aux Energies Alternatives (CEA) and BlueStorage SAS, aims to improve technical cooperation between the two countries by collaborating on joint research working groups, working on pilot projects and facilitating capacity building programmes in the following key areas:

  • Solar
  • Wind energy
  • Hydrogen
  • Biomass

Key Objectives of the MoU
The main objective of this MoU was to establish bilateral cooperation in the field of new and renewable energy. Key actions included under the MoU are as follows:

  • Exchange and training of scientific and technical personnel
  • Exchange of scientific and technological know-how
  • Transfer of equipment and technology
  • Development of joint research and technological projects

Moreover, this partnership is likely to support India’s ambitious target of achieving 450 GW of installed renewable energy capacity by 2030.

Current Developments in the Renewable Energy Sector
By increasing the share of renewable energy, India aims to achieve multiple objectives including enhancing energy security, improving access to energy and mitigating climate changes. To facilitate these objectives, the government has outlined policies and programmes to create a positive environment to attract foreign investments in the market.

Also, India is slowly building its renewable energy (RE) capacity and as of February 2021, the country’s RE installed capacity was the fourth largest in the world. India’s total installed RE capacity is 92.97 GW, with additional 49.59 GW under installation. Of the total renewable energy installed capacity, wind energy accounted for 38.68 GW, solar energy (38.79 GW), biomass (10.31 GW) and hydropower (4.76 GW).

In addition, India has developed an ambitious plan to achieve renewable energy capacity of 175 GW by 2022 and 450 GW by 2030. Moreover, it has set a target to add RE capacity of 14.38 GW in 2021, wherein solar power is expected to account for 11 GW and wind power is likely to contribute 3 GW. To realise this, the country is creating an ecosystem to attract investments for developing and adding capacity in RE plants.

As of March 2021, India is in the process of inviting competitive bids for RE projects (for adding 27.02 GW capacity), while the earlier capacity addition plan for 50.15 GW is under various stages of development. The SECI is currently managing tenders for capacity expansion projects (16.2 GW), including tenders to commission solar projects (7.5 GW) in Jammu & Kashmir, 2.5 GW in Karnataka and 6.2 GW anywhere in India.

Government Initiatives
To boost investments and development in the renewable energy sector, the Indian government has taken numerous initiatives such as approving the Electricity (Amendment) Bill 2020. The new draft aims to lend an impetus to this sector. Key amendments in the bill are as follows:

  • Formulate a ‘National Renewable Energy Policy’ to promote electricity generation from renewable energy sources and prescribe a ‘minimum percentage of purchase of electricity from renewable and hydro energy sources’ in consultation with the state governments.
  • Determine renewable purchase obligation (RPO), which shall bring uniformity in the RPOs across all states.
  • Introduce purchase obligation with respect to hydro energy sources.
  • Create a structural parameter for renewable energy sources and encourage hydro power sources, along with other forms of renewable energy sources.
  • Introduce renewable generation obligation (RGO) to enable the central government to outline rules pertaining to RPOs and RGOs.
  • Create and strengthen the existing conceptual and contractual framework to increase investment opportunities in the RE sector.

To further aid this sector, the government introduced the following initiatives and schemes:

  • Focused on schemes such as development of solar parks and ultra-mega solar power projects, UDAY Scheme (Ujjwal DISCOM Assurance Yojana) and others to create the infrastructure required to boost use of renewable energy sources.
  • Extended the US$ 12.4-billion financial packages to assist stressed power distribution companies (DISCOMs). These loans will be provided to DISCOMs against guarantees (by state governments) that will be used to clear liabilities of energy companies including renewable energy generators. This funding would be completed in two tranches of US$ 6.2 billion each.
  • Introduced a production-linked incentive (PLI) scheme, with fund allotment of US$620 million for the renewable energy sector.

Impact of the MoU
France is among the global leaders in the renewable energy sector. In 2019, renewable energy accounted for 23% energy consumption in France; this is expected to reach 43% by 2023. This partnership between India and France is expected to boost Indian renewable energy generators. As per the MoU, the two countries will create a joint working group, which will identify areas of cooperation in renewable energy technology, systems & subsystems, and coordinate and monitor relevant activities.

This MoU has opened the doors for institutional cooperation between India and France. For example, in 2018, Commissariat a l’Energie Atomique et aux Energies Alternatives (CEA) and BlueStorage SAS agreed to provide a solar panel-powered e-vehicle charging station with embedded batteries to the  SECI. The pilot was aimed to support the Indian govt.’s plan to achieve electric mobility and reduce impact on grids.