Govt to ease land acquisition, finance for renewables to meet 450 GW target

The Ministry of New and Renewable Energy has started drafting plans to set up mega capacities and ease investment in renewables to meet the new target set by Prime Minister (PM) Narendra Modi.

At the United Nations Climate Action Summit in New York on Monday, Modi vowed to double India’s renewable energy target to 450 gigawatt (GW) by 2030. This comes at a time when commissioning of projects has slowed and states are raising red flags.

In 2019-20, of the 3 GW target for wind power, 1.1 GW has been commissioned. For solar, 2.1 GW has been commissioned out of 7.5 GW target.

Slow project allocation and financial stress has halted wind power projects. Solar projects have been facing land crunch and grid connectivity issues. A downward revision of tariffs in Andhra Pradesh could hit renewal projects of nearly 7.5 GW.

On the cards

The renewable energy ministry is planning to introduce a standard power-purchase agreement (PPA) for projects.

“We’ll modify the PPA for solar and wind projects. There will be a standard bidding document,” said Aanand Kumar, secretary, Ministry of New and Renewable Energy.

He added, “The terms of the PPA will ensure any default from the procuring state would lead to stringent penalty. A letter of credit-type system of payment would also be mandatory.”

To sort out land-acquisition issues, the ministry plans to change the project-award system, switching the “plug-and-play” model.

“The government will acquire the land. Special-purpose vehicles (SPVs) will be formed by state-owned companies such as SECI, NTPC, NHPC, PFC, and REC. The land will then be allotted to private companies bidding for projects,” said a senior government official.

The model the ministry is developing will take a leaf out of the books of ultra-mega thermal power projects (UMPP). Of the 16 UMPPs planned, four were awarded to private players and only two are still running.

Wind losing steam?

As India expands it renewables portfolio, wind power seem to be losing steam.

Leading domestic wind turbine manufacturers, with more than 80 per cent market share, are staring at a weak order pipeline, financial losses and regulatory niggles. Foreign companies, including some Chinese ones, are increasing footprint in India. This could lead to cost escalation, claim power producers.

Commissioning from wind power projects has slowed to historic lows. Last financial year, projects of 841 megawatt (MW) were commissioned. The Centre has tendered projects to the tune of 7,000 MW in the past two years.

Dull solar

In solar, the challenge is low capacity of domestic solar panels and increased influx of imports from China.

“The government should implement stringent anti-dumping duty on a priority to deal with cut-throat competition from international players. As the country is going through slowdown, the industry is witnessing a decline in the adoption of solar,” said Sunil Rathi, director, sales and marketing, Waaree Energies, a leading solar panel manufacturer in India.

In order to boost Make in India, the renewable power ministry has asked the Ministry of Finance to impose a Customs duty on solar cells and modules being imported into the country.

The government is taking several steps to curb imports. However, mega tenders for solar manufacturing has been repeatedly ignored by industry players, both domestic and foreign.

Paucity of bid forced the government to extend the deadline for it for the 12th time last week.

Ministry officials, however, said the government was in constant discussion with industry and the tender would be a “mega success”.

A senior official said several manufacturers had committed to increase their manufacturing capacity many times to meet demand. Leading the manufacturing expansion was Adani Mundra, which is planning to add another 1 GW capacity followed by Jupiter Solar, Premier Solar and others.