By Sudarshan Varadhan and Sethuraman NR
NEW DELHI (Reuters) – Bribery allegations against Adani Group founder Gautam Adani have highlighted the growing problem India’s renewable energy developers face in finding buyers for the power they generate.
While India’s central government wants to shift from polluting coal-fired generation to solar and wind power, officials say state government-owned power distribution companies responsible for keeping the lights on have been slow to strike power deals. purchase of renewable energy.
US authorities allege that Indian billionaire Adani conspired to devise a $265 million scheme to bribe Indian state government officials to secure solar power supply deals, after one of his companies failed to find buyers for a 6 billion dollar project over several years.
The Adani Group has denied the charges.
The conglomerate is not the only one facing increasingly long delays in signing up buyers for the renewable electricity capacity now being developed in coal-dependent India, the world’s third-largest greenhouse gas emitter.
Coal accounted for 75% of India’s power generation during the year to the end of March, and renewables such as solar and wind, but not including hydroelectricity, accounted for around 12%.
India is still more than 10% short of its much-publicized commitment to add 175 gigawatts (GW) of renewable energy by 2022.
That has led the federal government to increase bidding for renewable projects to meet an ambitious 2030 goal of increasing its non-fossil fuel capacity to 500 gigawatts (GW).
In the five years to March 2028, it plans to tender for more than four times the capacity of the renewable energy projects it commissioned in the previous five.
To pressure states to help meet India’s overall goal, New Delhi in 2022 introduced so-called renewable purchase obligations (RPOs), which require states to increase the adoption of clean energy so that national participation double to 43.3% in March 2030.
Meeting these RPOs would require 20 of the 30 monitored provinces to more than double the share of green energy in their electricity mix, a February report by government think tank NITI Aayog showed.
The problem is that Indian states are unprepared for the rapid increase in renewable energy generation capacity, lack adequate transmission and storage infrastructure, and prefer to rely on fossil fuels for supply rather than take a chance on renewables.” intermittent”.
The challenges were tough for Adani Green, India’s largest renewable energy company, which took almost three and a half years to close supply deals with buyers for the 8 gigawatts (GW) of solar power capacity it gained in a tender widely publicized as the largest in the country.
DEMAND POOL
However, setting bidding targets and issuing contracts “doesn’t make sense” while interest from power distribution companies is so low, said R. Srikanth, an energy industry adviser and dean of the National Institute for Advanced Energy Studies. India.
And the allegations against Adani are likely to result in a further slowdown in renewable energy as it may become more difficult to secure low-cost financing from foreign investors, Srikanth said.
A change in the way some tenders are carried out has exacerbated delays in the time it takes to complete renewable energy projects.
The tender won by Adani Green was the first major contract issued by state-owned Solar Energy Corp of India (SECI) without a state-guaranteed power purchase agreement (PPA).
When it was announced in June 2019, SECI said buyers had a guarantee, but withdrew the provision from the signed agreement a year later.
The SECI president told Reuters last month that a three-fold increase in bidding for renewable projects has left 30 GW of projects for which bidding is complete, but without buyers.
“You cannot expect states to respond and start signing power supply agreements three times,” RP Gupta told Reuters in an interview, adding that “a demand group has to be created” and states had to be “sensitized “on renewable energies. .
Brokerage JM Financial (NS:) said it now takes 8 to 10 months to sign power supply agreements after a contract is awarded.
By comparison, companies awarded contracts between July 2018 and December 2020 needed around three months to close supply deals, SECI data showed.
“The sudden increase in offers, the large pipeline of projects under construction, the mismatch between energy demand and the supply portfolio… and limitations in the timely execution of projects are causing delays in the signing,” he said JM Financial.
Renewable energy projects have also suffered cancellations, with around 4% to 5% of all tendered projects canceled and delays in the development of transmission infrastructure, Gupta said.
One solution, said Rakesh Nath, former chairman of the Central Authority of India, would be to know how much power buyers want before bidding for projects.
“Making buyers confident before inviting tenders can minimize delays in signing power supply agreements,” he said.