Rather than budgetary sops, the centre’s focus is now on increasing the effectiveness of UDAY (Ujwal Discom Assurance Yojana) that was launched in 2015 to help stop the fiscal haemorrhaging of discoms. The scheme has faced criticism of late owing to mounting debt and overdues of discoms. In a report last month, ratings agency CRISIL had said the combined external debt of discoms had reached Rs 2.28 lakh crore in March 2019 and is set to rise to pre-UDAY levels by March 2020.
The government has now decided to use a carrot and stick approach to deal with erring discoms. Along with proposed reforms including disallowing commercial losses of more than 15% to be passed on in consumer tariffs and deferring of power price hikes by regulators, the government also plans to stop extending UDAY incentives to distribution utilities that fail to meet government-set targets during the second phase of the scheme.
The ineffectiveness of UDAY is evident in the growing number of states where future of renewable energy has become uncertain as discoms are saddled with debt. Rajasthan has now become the latest to join the list as three discoms in the state have amassed dues of Rs. 843 crores towards wind power generators and power purchasing agreements have not been renewed.
Andhra CM defies Centre, calls for review, cancellation of PPAs
Newly elected Andhra Pradesh chief minister YS Jagan Mohan Reddy has delivered another massive blow to investor confidence by announcing the review of power-purchase agreements (PPAs) signed by the previous government in the renewable energy sector claiming losses of Rs2,636 crore to the state exchequer. Further, PPAs for projects in the pipeline have also been cancelled by the new government citing irregularities. A government notification has elaborated that this cancellation would include PPAs of 21 wind power projects, a 600 MW Siemens Gamesa hybrid project, Axis Energy hybrid project, energy storage projects and about 600 MW of schedulable power.
Gujarat to triple renewable capacity in three years
Even as investor confidence remains low and debts to renewable energy producers continues to grow across the country, Gujarat has doubled down on its plans to increase renewable energy production. The state has announced plans to more than triple its power generation capacity from renewable sources to 30,000 megawatts (MW) in the next three years, a third of which is expected to be sold to other states. The plan includes a Rs1,000-crore new rooftop solar power generation scheme that aims to cover 2 lakh families. The state’s current capacity stands at 8,885MW.
Solar imports down 40% in Q1 of 2019
Latest trade data suggests that India’s solar imports, on which the country’s solar energy industry is heavily reliant, has fallen by 40% in the first quarter (Q1) of 2019. According to Mercom India’s analysis of Department of Commerce data, solar modules and cells valued at approximately $650 million (~Rs45 billion) were imported by India in Q1 2019 compared to $1.1 billion (~Rs76 billion) worth of solar cells and modules imported in Q1 of 2018. While China remained the largest exporter to India, trade volume dropped by 47% year-on-year. The reason for the decline in imports is widely believed to be the 25% import tariffs introduced by the government last year in an effort to boost domestic manufacturing.
REC sales continue to slide in a worrying trend for the sector
In yet another indication that all is not well in India’s renewables sector, sales of renewable energy certificates (REC) dropped by 22%. The Indian Energy Exchange (IEX) and Power Exchange of India (PXIL), the two power bourses in the country, which are engaged in trading of RECs, reported at the end of the June trading period that REC trade volume fell to 6.98 lakh units in June as compared to 8.96 lakh in the same month a year ago. As availability of power from solar and hydro projects contracted long term with discoms increases, availability of RECs on trading platforms has reduced. This has resulted in buy bids exceeding sell bids, and an increase in the value of the certificates. This does not bode well for growth trajectory of renewables in the country and indicates an urgent need to bring more projects under the REC ambit.
WTO provides India relief in trade battle over solar exports to the US
A World Trade Organization (WTO) dispute panel has ruled in favor of India in its complaint against the United States over subsidies and rules applied by eight US states in the renewable energy sector, such as for solar and wind power. The panel found that California, Connecticut, Delaware, Massachusetts, Michigan, Minnesota, Montana, and Washington had improperly given tax or financial incentives to domestic producers of renewable energy systems, components or “inputs” made in those states, in effect discriminating against imported goods. India didn’t specify the amount of alleged damage of the practices. The two sides have up to 60 days to appeal.
Centre to introduce solar scheme for farmers
The Indian government is in the process of operationalising a scheme to enable the sale of solar power generated on farms to the government. Power minister RK Singh informed the Lok Sabha on July 4 that farmers would now be able to use their land to install solar panels, power generated from which would be bought by the government at 30-35 paise per unit. According to the minister, this would ensure an annual income of up to Rs1 lakh, as part of the Prime Minister’s target of doubling farmer income by 2022.
Delhi police to go solar across the capital
In a bid to transition to clean energy and cut down on electricity bills, the Delhi police on July 3 announced that it would install rooftop solar energy systems in over 200 of its buildings across the city. The installation will be taken up as a part of an MOU between the Solar Energy Corporation of India (SECI) and the Delhi police. With this project, it is estimated that Rooftop Solar Systems of total capacity of about 3-4 MW will be implemented across various Delhi police buildings.