In this list
Energy | Coal | Electric Power

ANALYSIS: Delayed power reforms hinder India's path to 450 GW renewables goal by 2030

Commodities | Electric Power | Electricity | Energy | Coal | Energy Transition | Emissions | LNG | Natural Gas | Natural Gas (European) | Oil | Crude Oil | Metals | Steel | Steel Raw Materials | Shipping | Tankers

Market Movers Europe, Oct 25-29: Mixed signals for oil prices, energy majors release Q3 results

Energy | Oil | Refined Products | Jet Fuel

Platts Jet Fuel

LNG

S&P Global Platts JKM LNG Workshop

Energy | Natural Gas | Electric Power | Coal | Energy Transition | Electricity | Emissions | Renewables

New York regulators deny permits for two gas-fired power generation projects

Energy | Energy Transition | Emissions | Natural Gas | ESG | The Path to Net Zero

Methane performance certificates to bring price transparency to emission reduction efforts

ANALYSIS: Delayed power reforms hinder India's path to 450 GW renewables goal by 2030

Highlights

Observers say target too high but achievable with policy revamp

India's renewables capacity seen above 300 GW by 2030: Platts analyst

Reliance Industries announces $10 bln renewables investment

India's path to meeting its ambitious target of 450 GW renewables capacity by 2030 is obstructed by a lack of systemic reforms and progress in the power sector -- factors that are key to unlocking further development of its clean energy sector.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

The South Asian country has achieved grid parity in many regions, where solar and wind energy-based power generation is already cheaper than fossil fuels like coal, but its state-run power transmission and distribution sector remains bogged down by decades of mismanagement and financial losses.

This underscores a lack of political initiative to boost power sector reforms necessary to build a modern power grid, which can benefit from the low prices of renewables and deploy utility-scale renewables to aid India's decarbonization efforts.

"A four-and-a-half times increase in the existing renewable energy capacity in 10 years is not going to be easy," said Ajay Shankar, distinguished fellow, The Energy and Resources Institute.

"As the share of renewable energy in generation rises rapidly in the coming years, the technical issues of variable renewable energy integration in the national interconnected grid would have to be successfully addressed," said Shankar, who believes the 450 GW target is doable.

Overcoming these policy challenges will determine not just India's ability to commit to emissions reduction goals but also whether it can incentivize new investment in its renewables industry, and grow clean technologies like battery storage and carbon capture.

Andre Lambine, senior analyst, Global Power Analytics at S&P Global Platts, said by 2030, India may have above 300 GW of installed grid-connected renewables power plant capacity.

"While we believe annual installation will triple within a few years, it is unlikely that the country can reach its goals of 450 GW renewables capacity by 2030, unless the government introduces significant policy changes," Lambine said.

Big industrial conglomerates like Reliance Industries Ltd. and Adani Group have the potential to change the game, Lambine added.

Reliance Industries' Chairman Mukesh Ambani announced June 24 a Rupees 75,000 crore ($10 billion) investment in the next three years into renewable power.

"Reliance will establish and enable at least 100 GW of solar energy by 2030," Ambani said.

Receivables delayed

"The pandemic may have complicated things, but even before that we had outstanding dues from the Discoms [distribution companies]," said Subrahmanyam Pulipaka, CEO at National Solar Energy Federation of India, or NSEFI, representing 140 members. "We are getting suffocated."

Unpaid dues run into billions of dollars, he said.

Renewable companies and distribution companies sign power purchase agreements, or PPAs, for 20-25 years at fixed prices. But most distribution companies have been running losses over decades owing to poor collections and political interference. This delays payments to renewable generators.

PPAs are also in trouble owing to a sharp decline in power prices. Data on the website of the Indian Ministry of New and Renewable Energy showed renewable prices were at Rupees 1.99/kWh in 2020-21, down 69% from Rupees 6.47/kWh in 2013-14.

"It is impossible to make money at 1.99," said Ritu Lal, senior vice president and head, institutional relations, Amplus Solar. Amplus is a part of Malaysia's Petronas Group.

"It is an aggressive number and there is a question mark on whether these prices will sustain," Lal said.

Cost pressures

There are procurement woes too.

India's component manufacturers did not grow in line with the power producers and largely remain assembly units of solar modules mainly imported from China.

The government has recently put restrictions on imports and simultaneously introduced a "profit-linked incentive" program to give local production a boost. However, Lal said it has only just started and not enough production is expected immediately.

PPA reneged, tenders canceled

More seriously, there are instances of PPAs being reneged or tenders and letters of intent canceled.

"Renegotiation of the contracts is like a pandemic that is spreading. It started with Andhra Pradesh state government renegotiating the installed projects PPA in 2019. The matter is still pending in the court," said NSEFI's Pulipaka. "After that, the Punjab govt came up with a bizarre request asking our members to discount PPA tariff."

The Gujarat state government canceled some letters of intent and they have retendered, and Uttar Pradesh state did the same thing, he added.

Government, FDIs supportive

Yet, the Indian renewables industry, just a decade old, has survived and is growing on the back of government bailouts as well as some big foreign direct investments.

The government announced June 30 a Rupees 3,037 billion ($40.5 billion) package "to improve the operational efficiencies and financial stability of all Discoms/ power departments." The financial budget for 2021 contained a profit-linked incentive program for the manufacture of solar modules.

"The government is aligned with this sector," said a banker who arranges green bonds.

These government bailouts, the easy funds and the country's low per capita electricity use has attracted the likes of Temasek, Vestas, SoftBank, KKR and other global companies that have brought in $70 billion in investments in the last seven years.