India’s chances of achieving its 2022 clean energy target might be dim
Over the last decade, India has made a long inroad in terms of adding capacities in renewable energy. The installed capacity has risen six-fold to nearly 83 gigawatts. Among renewables, utilization of solar power is gaining tremendous growth compared to wind energy. According to the Central Electricity Authority (CEA), in the past 5 years, solar power has seen capacity grow by 12 times to over 31 GW.
The government had set a target of 175 GW of installed clean energy by 2022 which didn’t seem unrealistic. However, a spate of issues related to tariff caps, land acquisition and import duty on solar cells and modules put brakes on the rapidly growing capacity addition.
These issues were aided by delays in payments by utilities and fueling the fear of missing the clean energy target. Moreover, Andhra Pradesh’s decision to renegotiate tariffs of solar and wind projects followed by liquidity crunch in the shadow banking sector has plunged the clean energy sector into the worst crisis in recent years.
Complicating it further was Andhra government’s decision to review power purchase agreements signed with wind and solar power producers in an effort to lower tariffs.
For example, Acme Solar Holdings, the country’s largest solar power developer is awaiting the payment of Rs. 210 crore from Andhra Pradesh and Rs. 386 crore from Telangana. Payments have been delayed over 3 months resulting in a significant loss in return on capital.
As a result, the optimism is dwindling in the investors and IPPs (independent power producers). Even rating agency CRISIL’s recent report mentioned that India may find it difficult to achieve 100 GW of solar energy and 60 GW of wind energy even by 2024.
All of these might severely affect the ability of renewable energy companies to invest in growth and some might even turn insolvent. Thus, if no solution is found soon, India’s bold clean energy target might just remain that.