Power supply agreements (PSAs) for auctioned renewable energy projects totaling 7 giga watt (GW) have been delayed and will impact India’ green energy targets, according to Crisil Research.
Given that an intermediary procurer such as state-run Solar Energy Corporation of India (SECI) signs power purchase agreements (PPAs) with the project developer after signing back-to-back PSAs with electricity distribution companies (discoms), the inordinate delay in finalizing the PSAs has in turn delayed the signing of PPAs.
Such delays will impact India’s ambitious green energy targets. India is running the world’s largest clean energy programme to achieve 175GW of renewable capacity, including 100GW of solar power by 2022.
“Delays in power supply agreements (PSAs) for 7 GW of the bid out renewable energy projects is one of the main reasons that may lead to 35% shortfall in 160 GW renewable energy capacity target set for calendar 2022-end,” Crisil said in a statement.
“This excludes 11.5 GW of recently allocated capacities where either PSAs would be unsigned or their construction timeline could go beyond fiscal 2023,” the statement pointed out.
Mint reported on 20 August about falling clean-power tariffs putting an already awarded 16.8 GW solar and wind energy capacity in limbo, as fund-starved discoms are unwilling to sign contracts with intermediary procurers such as SECI for these previously-awarded projects at a comparatively higher tariff. Due to the recent low-price bids, the discoms are tariff-shopping and are reluctant to ink PSAs.
“The PSAs for the 7 GW of projects bid out at auctions prior to February 2020 are yet to be signed primarily because subsequent auctions saw tariffs plummeting and even falling below ₹2 in December 2020.Of this, nearly 3GW run the risk of re-auction or cancellation because their tariffs are comparatively higher at over ₹2.75 per unit – a good 75 paise more than the recently discovered tariffs,” said Hetal Gandhi, director, CRISIL Research in the statement.
However, there has been sustained interest in India’s green economy despite the problems faced by the sector and turmoil caused by the pandemic. India has been ranked third in EY Renewable Energy Country Attractiveness Index, after US and China.
According to the Central Electricity Authority—India’ apex power sector planning body—by 2030, the country’s power requirement would be 817GW, more than half of which would be clean energy, and 280GW would be from solar energy alone. To achieve the target of 280GW, around 25GW of solar energy capacity is needed to be installed every year till 2030.
