The setting sun on India’s solar dreams

Source: LiveMint.com, Nov 25, 2019

MUMBAI : In September, while speaking at the United Nations Climate Action Summit in New York, Prime Minister Narendra Modi committed to setting up 450 gigawatts (GW) of non-fossil fuel power by 2022. With this, he more than doubled the initial target of 175GW of green energy that his own government had set in 2018. “We must accept that if we have to overcome a serious challenge like climate change, then what we are doing at the moment is just not enough,” Modi told the audience of gathered world leaders in New York.

Back home, however, the renewable energy industry that Modi is resting his hopes on is flailing. India’s installed green energy capacity stands at about 65GW today. It was expected to cross 100GW by December 2022, definitely short of the government’s 175GW target and far behind 450GW. But even that expected 2022 projection now seems a bit too optimistic.

For the last few years, as thermal power slowly fell out of favour due to rising coal costs and natural gas disappeared from the domestic market, everybody wanted to get in on the green energy game. And a big bulk of the new investments in green energy went into silicon panels, which were powered by the sun. However, that breakneck pace of the last few years is now flagging and the solar/wind party is on the verge of a shutdown.

Solar energy tariffs in India are among the lowest in the world, but state governments are keen to push them down further. These dangerously low tariffs are turning unsustainable for some developers, who in turn cut corners on quality. Some state power distribution companies (discoms) are also over a year late on paying their power bills.

Developers in Andhra Pradesh are facing an existential crisis as the state holds them hostage with two equally unpleasant options: either lowering the tariffs agreed to by the previous government or stopping generation altogether. And where there was once a steady stream of investment into the sector, that tap is now turned off.

Independent power developers (IPPs) are wary of admitting to a slowdown, but the signs are everywhere. Of the 64GW that was auctioned by the Centre and states in FY19, 26% received no or lukewarm bids and another 10% got cancelled.

Tariffs that states are willing to pay are capped at ₹2.50-2.80 per unit, limiting the room for IPPs to improve profit margins and disincentivising quality projects.

Read the rest of this entry »

Andhra Pradesh tightens renewable energy norms

Source: Financial Express, Nov 19, 2019

Increasing its pressure further on renewable energy developers, the Andhra Pradesh government has amended its solar and wind power policies, effectively taking more control over setting tariffs from such power generation units. According to industry sources, the move would create further confusion in the investment environment in the renewable energy sector in the state.

Deleting older provisions, the new order mandates that the transmission and distribution charges for wheeling power would be determined by the state power regulator. The state government claims that the move is in response to the “abnormal spurt in power purchase cost and deteriorated financial position of the AP discoms”.

In its latest order, AP energy department also states that tariff from renewable energy-based electricity will not be more than the “difference between pooled variable cost and balancing cost”. Balancing cost refers to the expenses that power distribution companies (discoms) incur in order to accommodate renewable energy in the system. Variable cost mainly includes the expenses on fuel and its transportation for power generation by conventional sources.

The new government in Andhra Pradesh, against the advice of the Union power ministry, has formed a committee to revise “abnormally priced wind and solar” PPAs, saying there might have been linked with “malafide intentions” and could have “resulted in unjustified burden on the consumers of the state”. In his letter to Narendra Modi earlier this year, Andhra Pradesh CM YS Jaganmohan Reddy had stated that “the effective cost of wind power was coming to Rs 5.94/unit as the state, under contractual obligation, had to continue paying Rs 1.1/unit fixed cost to thermal power plants even when they were not using this electricity to accommodate renewables”. AP was buying wind power at Rs 4.84/unit when thermal energy, which had to be backed down, was already tied up at Rs 4.2/unit, Reddy claimed. Crisil had noted that the state’s move of revising PPAs could put additional stress on about 5.2 giga-watt (GW) of wind and solar energy projects with an estimated debt exposure of over Rs 21,000 crore. Union power minister RK Singh had said that the move “has alarmed the sector and the investors” and “if this is not corrected, the FDI will stop coming, the banks will stop financing, and the growth in the renewable energy sector will come to a halt”. Since FY15, FDI in the renewable energy sector has been a whopping $4.8 billion.

Only domestically manufactured solar cells will be eligible for use under mandatory local sourcing category: MNRE

Source: The Hindu Business Line, Oct 22, 2019

New Delhi: Solar photo-voltaic cells that are predominantly domestically manufactured will be the only ones eligible to be used under the mandatory local sourcing category according to a statement from the Ministry of New and Renewable Energy.

“It may be noted that a number of flagship programmes of MNRE such as KUSUM, have provisions for mandatory use of domestically manufactured solar PV cells. However it was seen that some manufacturers have been importing semi –processed solar PV cells (generally called blue wafer) and making final Solar PV cells with little value addition in India,” an official statement said. Read the rest of this entry »

Adani Green commissions 50-megawatt wind energy capacity in Gujarat

Source: Business Standard, Oct 21, 2019

New Delhi: Adani Green Energy Ltd (AGEL) on Monday said it has commissioned 50 megawatt wind generation capacity at Kutch in Gujarat.

The company through its subsidiaries is implementing 725 MW wind projects in Kutch.

“AGEL announces commissioning of 50 MW wind energy generation capacity and signing of power purchase agreement with Solar Energy Corporation of India (SECI) for a period of 25 years,” a company statement said.

The company plans to commission another 225 MW wind capacity in the area by second half of 2020, for which the evacuation infrastructure is already in place, it added. Read the rest of this entry »

ICRA revises outlook for one-third of wind, solar projects, sees near term headwinds

Source: The Hindu Business Line, Oct 16, 2019

Hyderabad: Factoring the headwinds faced by the wind and solar energy power segments coupled with a gradual deterioration in the liquidity profile of the Independent Power Producers (IPPs) due to payment delays from some distribution utilities, ICRA has revised their rating outlook of almost one-third of its rated portfolio.

About 20% (1.9 GW) of the rated portfolio in wind and solar power segments in terms of installed capacity has been downgraded, while the rating outlook has been revised for another 10% of the portfolio. The industry segment is facing significant other headwinds in the near-term which has impacted investor sentiments.

The overall tendering of solar PV projects has slowed down with the solar capacity addition in six months of FY’2020 remaining subdued at 2.9 GW. Read the rest of this entry »

Modi’s ambitious wind-solar hybrid projects witness a slow beginning

Source: Financial Express, Oct 14, 2019

Wind-solar hybrid projects were seen as one of the options before the Union government to help it meet the ambitious renewable target of 175 MW capacity by 2022. Nearly a year since their launch, however, projects have seen a slow start, with experts attributing the same to the policy guiding auctions. Of the 3,200 MW of wind-solar hybrid tenders launched in the last one year by central and state agencies, only 2,400 MW have materialised and 1,600 MW been allotted, indicating an under-subscription of 34%. The auctions have witnessed participation from a handful of developers like Adani, Softbank, and ReNew Power.

The tepid response to the tenders even led the Solar Energy Corporation of India (SECI) to cut the capacity of one of its tenders from 2,500 MW to 1,200 MW. Two other wind-solar hybrid tenders, one from NTPC for 174 MW in Karnataka and another for 600 MW in Andhra Pradesh, have got cancelled. Read the rest of this entry »

175 GW renewables by December 2022, clarifies government

Source: Financial Express, Oct 10, 2019

The ministry of new and renewable energy (MNRE) clarified on Wednesday that the deadline for installing 175 giga-watt (GW) of renewable energy is December 31, 2022. “At places the date for achieving the stated target is mentioned differently, i.e, by the year 2022 or by FY22,” the clarification stated.

Thanks to the devaluation of the rupee, rising finance costs, government-mandated tariff caps in reverse auctions and cancellation of renewable project tenders, the pace of adding renewable generation capacities already slowed down in FY19, when the country added 8.6 GW against 11.3 GW and 11.8 GW added in FY17 and FY18, respectively. The installed renewable capacity now stands at 81.3 GW. The renewable energy industry is one of the major FDI earners with the sector attracting $4.8 billion foreign capital since FY15. Prime Minister Narendra Modi announced in the United Nations General Assembly that the country aims to have 450 GW renewable energy capacity. However, experts cautioned that recent instances of curtailment of solar and wind power in Andhra Pradesh and Uttar Pradesh can throw a spanner in the country’s ambitious plans.