With this issue, we celebrate our ninth anniversary. As before, we use this occasion to share our own perspective on the state of the renewable energy sector in India in 2019.
Overall, the sector has not really progressed in line with expectations. Yearly targets for both solar and wind have been revised downwards, and capacity addition has not been up to the mark. The pace of project development has slowed down due to transmission and land-related bottlenecks; new tenders are not receiving adequate response due to unreasonable tariff ceilings and regulatory uncertainties. Payments are delayed and the project cash flow cycle has jammed up. States reneging on solar and wind power offtake contracts is creating huge challenges to say the very least. In some states, renewable
assets are coming into the stressed category. Investors are, therefore, becoming wary of putting in additional funds into the sector.
There have been a few positives as well. Key among these is a clear acceptance by stakeholders of the dominance of renewable energy in India’s electric systems going forward and the firm stance taken by the central government in this regard. The share of renewable energy has reached 22 per cent and the headroom for further growth is immense. The focus on technologies such as floating solar and wind-solar hybrids to address resource constraints, and on storage for enabling better renewable energy integration are all steps in the right direction. Another huge positive is the focus on decentralised solar through rooftop systems, which offer many advantages.
The elemental point is that the technology, investments, competitive landscape, etc. of the sector are all good, but we have to look at fundamental solutions to fundamental problems (poor discom health, inconsistent policies, uncertain regulatory environment and an overall weak economy).
Unless we are able to resolve these, there will always be the risk of good money being thrown after bad. A lot of issues exist at the state level currently and hence, focusing on the states is important. There is also a need for a bold vision that recognises the realities and frees up the sector to leverage the opportunities that already exist and allows it to expand its vistas into new areas of growth, including electric mobility and energy storage.