Why India's green power ambitions is facing a roadblock
What's the story
The Indian government is planning to scrap green power projects that account for nearly 20% of the country's renewable energy capacity. The move comes as these projects struggle to find state utilities willing to purchase their electricity. The Ministry of Power has reviewed 42GW worth of planned projects without offtake agreements and recommended authorities to shelve those deemed unviable, according to Bloomberg.
Impact assessment
Potential cancellation could free up grid capacity
The potential cancellation of these projects could free up grid capacity, which has been struggling to keep pace with India's rapid renewable rollout. However, it would also deal a major blow to the country's green ambitions. India aims to double its clean power capacity to 500GW by the end of this decade.
Purchase challenges
State utilities reluctant to buy renewable electricity
State utilities, which are financially challenged, have been reluctant to buy renewable electricity. The irregularity of this power without energy storage systems has created a mismatch between supply and demand. The government has urged developers to combine projects with batteries to stabilize such volatility. This reluctance is further compounded by the Centre's decision to phase out transmission subsidies that fueled India's renewables boom.
Charge implications
Phasing out transmission subsidies adds to challenges
Projects commissioned after June this year will have to pay for transmitting electricity from one state to another. The Central Electricity Regulatory Commission's plan states these projects will initially pay 25% of the transmission charges, which will increase over time. By June 2028, all operations starting after this date would be subject to full transmission charges with no subsidies, further complicating the landscape for renewable energy producers in India.