Electricity demand in India has been growing exponentially, and the government wants to increase the capacity of renewable energy production to meet the growing need. India is right now working towards achieving the objective of gaining 175 GW of renewable energy by the year 2022. However, the country has built 83 GW of clean energy. Approximately 29 GW of renewable energy has already under the implementation process. That makes 112GW, and about 30GW is under submission, making the 175GW of renewable sources.
It is among the most ambitious renewable energy objectives in the world, which is more than the target set by developed nations. These targets are quite desirable; however, the country will require serious reforms in the transmissions as well as the distribution sector and effective policies to accomplish the mission. In July, the country requires USD 330 investment over the decade to operate its renewable energy dream.
The investment shows the magnitude of financial issues that the country is facing, with the data indicating a serious lag in private as well as a capital investment in March 2019.
What is the Current Scenario in the Adoption of Renewable Energy?
Experts are predicting that it will be hard for India to accomplish its target due to the slow growth in wind power as well as solar investment in the last few years. With a lack of adequate investment in storage and the inability to upgrade the grid in a timely manner, meeting the target of 450 GW may result in grid stability issues. This is because, the girds need to be developed to scale, along with energy production, they are used for storage and absorption as well. All these requirements need to be stabilized. The country can confidently achieve its clean energy target when the essential spadework is completed efficiently.
A couple of months back, Crisil, in its report highlighted the doubts over the government’s ability and policies to achieve its target. The report pointed out that at this rate, the country will not be able to accomplish its goals and will fall short by a minimum of 42%. However, the administrators have dismissed the report saying that not only the power sector in India will meet this target, but it will exceed the laid outnumber. India might exceed the target of 175 GW and produce 225 GW of clean energy by the year 2022. However, there were no figures to support the statement.
The Impending Financial Constraints on the Sector
Distribution companies across the nation owed power producing company a sum of INR 9, 736 crores. A majority of this amount was to come from Southern states, including Telangana, Andhra Pradesh, Karnataka, and Tamil Nadu. Payments have been due from the distributor from the past one year, which is majorly impacting the return on investments. Power distribution companies that are administrated by the state have been in financial constraint for a long time, and in 2015, the government had come with an initiative to support these companies, which wasn’t much of a help.
Another leading rating company, ICRA, relegated around 1.9 GW of wind and solar projects, stating the issues associated with liquidity due to financial dues. These payment delays have already impacted the growth potentials of renewable energy companies in India. And if these issues continue to prevail, these companies will hard time extending loans and even may go insolvent in the coming years.
Additionally, even it’s the distribution companies manage to pay, the sector still has to deal with the traffic caps problems. The central and states companies will most likely cancel their bids if the tariff suggests by power-producing companies goes higher than the capital. Moreover canceled renewable projects account for around tenth of the overall tendered projects in the year 2018 and 2019.
Evidently, the adoption of renewable energy looks quite challenging for India. For it to meet its committed target, the decision-makers need to come with a powerful solution that works across all verticals.
