India is considering canceling green power projects equivalent to as much as a fifth of the country’s renewable capacity because they’re struggling to find state utilities to buy their electricity.
The power ministry has reviewed 42 gigawatts worth of planned projects that have yet to sign offtake agreements and advised authorities to shelve those that are no longer feasible, according to people familiar with the matter, who asked not to be named because the discussions are private.
While the move could free up grid capacity struggling to keep up with India’s rapid renewable rollout, it would be a major setback for the green ambitions of the world’s third-highest emitter. The country aims to double clean power capacity to 500 gigawatts by the end of the decade.
The power ministry’s press office declined to respond to requests for comment. The government is closely monitoring projects where power sale agreements have not yet been finalized, the renewable energy ministry said in a statement, adding that, only those that have no prospects of getting an offtake arrangement will be considered for cancellation.
The ministry, which oversees development of green energy projects, said 43.9-gigawatts capacity auctioned by central agencies haven’t signed power purchase contracts as of September-end. Some power retailers are reluctant to sign purchase contracts with projects that are likely to take long to get grid access.
The country’s financially challenged utilities have been reluctant to commit to buying renewable electricity, which remains irregular without energy storage systems, resulting in a mismatch of power supply and demand. The government has called for developers to couple projects with batteries to stabilize such volatility.
Utilities have also shied away from buying power from other states as the government begins to phase out transmission subsidies that helped drive the renewables boom in the country, according to Ashwin Gambhir, a fellow at Prayas, a Pune-based non-profit research group that focuses on energy.
Projects commissioned after June this year will have to pay to send electricity from one state to the other, starting with 25% of the transmission charges. That will increase for future ventures, with aid completely phased out for operations starting after June 2028, according to a plan by the Central Electricity Regulatory Commission.
(Reporting by Rajesh Kumar Singh. With assistance from Saket Sundria.)
Disclaimer: This report is auto generated from the Bloomberg news service. ThePrint holds no responsibility for its content.
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