June 2019

The general sentiment in the renewable energy sector is mixed. With the outcome of the general elections now known, there is hope for policy stability and a bigger renewable energy development agenda.

No doubt, developers continue to struggle with payment concerns, auctions are receiving a tepid response or being cancelled, the integration of renewables has been difficult, the taxation structure remains uncertain, and old power purchase agreements continue to bedevil discoms. All of these, in turn, are making it tough for developers to raise funds. Industry experts believe that these issues have already impacted the pace of capacity addition in the sector, which has not been able to achieve its target for 2018-19.

However, a series of recent developments indicate that the government has scaled up its efforts to bring the sector back on a high growth trajectory. At the recently held “Chintan Baithak” (brainstorming session) between government officials and stakeholders from the renewable energy sector, the  government gave its assurance that most of the issues pertaining to transmission constraints and land unavailability would be resolved at the earliest by working with the state-level agencies. The MNRE is also building a case with the RBI for removing the priority sector lending limit for the renewable
energy sector. Further, discussions have been initiated to resolve GST-related issues for renewable energy equipment/components. In order to address discomrelated issues, work on UDAY II has started. With regard to payment security issues, SECI has been asked to set up a payment security fund, a risk mitigation mechanism to ensure regular payments to renewable power producers in the event of payment defaults by discoms due to a lack of funds.

In yet another positive, the country is beginning to see the emergence of a grid-scale energy storage market after years of anticipation. Over 10 storage-based tenders have been issued by various agencies in the past one and a half years. The developments taking place in the e-mobility and charging infrastructure space will further lend support to renewable energy storage systems in terms of economies of scale, bringing down the cost of these technologies.

With all these initiatives, renewable energy developers have reason to be upbeat and look forward to a mid-course correction.

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