India has come a long way in renewable energy in the past decade. The countryâ€™s installed capacity has risen sixfold to nearly 83 gigawatts (1 GW = 1,000 MW). And in the past 5 years, solar power, which is set to become bigger than wind energy within renewables, has seen its capacity grow around 12 times to over 31 GW, according to the Central Electricity Authority (CEA).
So for the majority of Prime Minister Narendra Modiâ€™s first term, his governmentâ€™s target of having 175 GW of installed clean energy capacity by March 2022 did not seem unrealistic. Of that, 100 GW was to be in solar energy, 60 GW in wind projects (the current capacity is 37 GW) and the rest in small hydel (up to 25 MW) and biomass plants.
However, questions about Indiaâ€™s ability to reach that milestone began to be raised last year, when a spate of issues related to tariff caps, land acquisition and an import duty on solar cells and modules slowed the pace of solar capacity addition. Now it seems almost certain India will fall short of its target, as delays in payments by utilities, Andhra Pradeshâ€™s decision to renegotiate tariffs of solar and wind projects and a liquidity crunch caused by problems in the shadow-banking sector have plunged the clean energy sector into its worst crisis in recent years.
â€œInvestors and IPPs (independent power producers) are quite concerned about the current environment in the renewable energy sector,â€ says Gaurav Sood, chief executive of Sprng Energy, a solar and wind power devel- oper. The optimism in the private sector about Indiaâ€™s clean energy prospects a couple of years ago is hard to find now.
Rating agency CRISIL in a recent report said India would not have 100 GW of solar capacity and 60 GW of wind capacity even by 2024, leave alone 2022. CRISIL said it expected India to only have 59 GW of solar plants and 45 GW of windmills by March 2022. The government, not surprisingly, rubbished the report and said India would not only meet the target but exceed it.
Renewable energy accounts for under a fourth of Indiaâ€™s installed power capacity but contributed only a tenth to the electricity generated in 2018-19, according to the CEA. Clean energy is crucial to Indiaâ€™s commitment under the Paris Agreement on climate change to reduce its carbon emissions relative to the gross domestic product by a third by 2030 from 2005 levels. India, the worldâ€™s third-largest emitter of greenhouse gases, wants 40% of its total installed power capacity by 2030 to be in renewables, up from the current 23%. Indiaâ€™s wind power potential has been pegged at over 300 GW and its solar power potential at nearly 750 GW.
But, unfortunately, wind and solar energy developers are running into some of the same problems as their counterparts in thermal power a few years ago, chief among them being outstanding dues from utilities. As of July 2019, distribution companies across India owed renewable power producers Rs 9,736 crore, according to CEA data. Around three-quarters of that were owed by four southern states â€” Andhra Pradesh, Tamil Nadu, Telangana and Karnataka.
Acme Solar Holdings, the countryâ€™s largest solar power developer, is waiting for payments totalling Rs 210 crore from Andhra and Rs 386 crore from Telangana. Payments have been delayed between three months and a year. â€œWe only factor in a delay of 1-2 months,â€ says Shashi Shekhar, vice-chairman of Acme, â€œThere is a significant loss in return on capital because of these long delays.â€
Referred from economic times