NEW DELHI: Bribery charges against Gautam Adani, founder of India’s Adani Group, have exposed a major problem facing India’s push towards renewable energy adoption.
It has emerged that the country is facing a growing problem of renewable energy developers struggling to find buyers for the electricity they generate.
State-owned power distribution companies responsible for keeping the lights on are dragging their heels on renewable purchase deals as New Delhi aims to transition away from coal-fired generation to solar, officials say. And to go to the wind.
The group is not alone in facing increasingly long delays in signing up buyers for renewable power capacity that is now being produced in coal-dependent India, the world’s third-largest emitter of greenhouse gases. It is a country that does.
Coal accounted for 75% of India’s electricity generation in the year to the end of March, with renewables such as solar and wind, but not including hydropower, accounting for about 12%.
India is still 10 percent short of its much-heralded commitment to add 175 gigawatts (GW) of renewable electricity by 2022.
This has led the federal government to accelerate bidding for renewable projects to meet an ambitious target of increasing its non-fossil fuel capacity to 500 gigawatts (GW) by 2030.
In the five years to March 2028, it plans to tender four times the capacity of renewable energy projects it commissioned in the previous five.
To push states to help meet India’s overall target, New Delhi introduced so-called Renewable Purchase Obligations (RPOs) by 2022, which mandate states increase their adoption of clean energy. so that the national share doubles to 43.3% by March 2030.
A February report by government think tank NITI Aayog said that 20 out of 30 provinces would need to monitor more than double the share of green power in their electricity mix to meet these RPOs.
The problem is that India’s states are unprepared for rapid increases in renewable generation capacity, lack adequate transmission infrastructure and storage, and rely on fossil fuels for supply rather than “risky” renewables. will do
The challenges were stark in the case of Adani Green, India’s largest renewable energy company – which took more than three years to strike supply deals with buyers for 8 gigawatts (GW) of solar capacity. The largest in the country.
Less interest in discos
R Srikanth, a power industry consultant and dean of India’s National Institute of Advanced Studies, said it was still “pointless” to set targets for tenders and issue contracts unless the power distribution companies were so interested. is less
And the allegations against Adani are likely to result in a further slowdown in renewables, as it may be more difficult to secure low-cost finance from foreign investors, Srikanth said.
Changes in the way some tenders are run have increased delays in the time it takes to complete renewable projects.
The tender won by Adani Green was the first major contract awarded by the state-run Solar Energy Corporation of India (SECI) without a government guaranteed Power Purchase Agreement (PPA).
When the announcement was made in June 2019, SECI said the buyers were guaranteed, but it withdrew the condition from the agreement signed a year later.
The SECI chairman told Reuters last month that the tripling of tendering for renewable projects had left 30 gigawatts of projects that had been bid for, but remained without buyers.
“You cannot expect states to respond and sign three-fold power supply agreements,” RP Gupta told Reuters in an interview, adding that “a demand pool has to be created” and states Has to be “sensitized” for renewables. .
Brokerage JM Financial said it now takes eight to 10 months to sign power supply deals once a contract is in place.
In comparison, companies awarded contracts between July 2018 and December 2020 needed about three months to finalize supply deals, SECI data showed.
Sudden increase in bids, large pipeline of projects under construction, power demand mismatch and bid pipeline […] And hurdles in timely completion of projects are leading to delays in signing,” said JM Financial.
Renewable energy projects have also seen cancellations, with about 4%-5% of all tendered projects cancelled, and a backlog in transmission infrastructure development, Gupta commented.
One solution, said Rakesh Nath, former chairman of India’s Central Electricity Authority, is to know how much power buyers want before bidding for projects.
“Taking buyers into confidence before inviting bids can reduce delays in signing power supply contracts,” he said.