Is it realistic to achieve 175 GW of renewable capacity by 2022? An IPP’s take

Is it realistic to achieve 175 GW of renewable capacity by 2022? An IPP’s take

Authored by
Parag Sharma – Founder and CEO at O2 Power
Vinamra Singh – Manager, CEO Cell at O2 Power

 

Government of India (GoI) has set a target of installing 175 GW of renewable energy capacity by the year 2022. This includes 100 GW from solar, 60 GW from wind, and  over all 450 GW by 2030. If you ask me, these are some very ambitious targets.

We IPPs are all up for ambitious targets. After all, it is any day better to fail pursuing ambitious targets than achieve mediocre ones. However, 175 GW will require a complete system overhaul with collaboration from every stakeholder in the renewable energy industry to  drive modifications and system improvements.

Track record so far

India started with 1 GW solar power capacity in 2010. Today, it has around 35 GW of solar power. We have also added about 25 GW of wind power capacity in this period.

Going forward, the sector requires rapid ramp-up to achieve the goal set out for the year 2022. This is aggressive but achievable, and subject to the government delivering:

  • Policy stability
  • Proactive bidding strategy
  • Transparency and consistency

In the past, India has seen too many policy inconsistencies, change, centre-state conflicts, resulting in negative investor sentiments. These need to change — an ecosystem should be created which will enable free flow of capital, long term regulations and centre-state collaboration.

Further, capital requirement to achieve the 2022 target is close to $80 billion at today’s prices. This is a tall ask, and will need well thought through financing roadmap.

Steps required to achieve 175 GW

  • Auction out the capacity as soon as possible. Additionally, auction out the associated infra like switchyards and transmission line. There have been constant delays in conducting the bids — with bids having extended for months, years in case of some complex bids. Bids that require coordination and collaboration amongst all the stakeholders is often found lacking thereby resulting in huge delays.

 

  • For many already bid out capacities, there is a huge backlog in the signing of PPAs — greater than 20 GW of auctioned capacity is yet to find a PPA. In these uncertain times of forex rate fluctuation, varying equipment prices, waiting for PPAs to be signed becomes riskier by the day. This uncertainty can be resolved by taking firm annual commitments from discoms for purchase of power. As per the competitive bidding guidelines for conventional power plant, a demand-supply analysis is done by a discom and vetted by the regulator, before a bid is called. Although it might seem like a cumbersome task, done even once a year, it will help in avoiding unnecessary delays post a bid is called.

 

  • The competitive price that discoms expect makes the risk-reward relationship highly skewed against developers. A number of bidding agencies, upon finding auction prices undesirable, resort to bid annulation. Government must restore the sanctity of auctions and should refrain from cancellations or postponement of bids.

 

  • MNRE should come out with a bidding calendar providing month-wise target for bids. Ministry of Power (MoP) also needs to have a long-term de-commissioning plan for old thermal power plants, which will help discoms plan their power procurement. With clarity on auctions and certainty on the complete capacity bidding out, the real work starts — monitoring of ‘actual construction’ of the projects. An even more difficult phase, a definite push is required at the policy level to solve implementation related issues including solar park implementation issues, adoption and approval of tariff at respective regulatory commission, ever-changing policy / regulations and implementation of change in law.

 

  • There is dearth of ISTS substations, with most ISTS substations and related infrastructure getting delayed thereby delaying the renewable plants construction. Land required for utility scale solar projects is getting exhausted; in case of wind, either the good wind potential sites don’t have a spare substation capacity in the vicinity or if the capacity is available, the wind potential is not good in that area. Add to this the uncertainty on ‘import-duty’ impacting the whole ecosystem, we find ourselves riding two boats simultaneously – trying to get the cheapest possible renewable energy cost while at the same time pushing domestic manufacturing which is at least 20-30% costlier than imports. This has a counter effect on the complete ecosystem.

Unarguably then, the crying need is a collective effort with holistic planning considering tender conditions, land acquisition strategy (for solar parks), substation availability, inter-agency collaboration, discoms honouring the PPAs, and a free flow of capital. IPPs, governments need to work cohesively on the country’s longer-term energy decarbonisation vision thereby giving a new dimension to the renewable sector.

4 Comments
  • SS
    Posted at 08:49h, 06 November Reply

    Great insight and fortunate to be able to learn and gather thoughts from industry experts like you.

  • Hardik Bhesaniya
    Posted at 09:25h, 09 November Reply

    Quite informative and thoughtful article to give a bird’s eye view.
    One of the area to think and work upon:
    One of the major disadvantages of renewable (solar and wind) power is its uncertainty. With the renewable penetration increasing in the grid, the stability issue and other related issue needs a permanent solutions like battery storage, better forecasting models using the AI/ML, etc.. While the IPPs are doing their part it is now the time national grid operator step up to implement the steps to safeguard the grid which needs to handle so much of the varying renewable power in the times to come.

  • Aravind Udupi
    Posted at 15:10h, 10 November Reply

    Totally agree. Need of the hour for renewables

    Diligent support from centre:
    a) Ease DISCOM non payment to Renewable IPP
    b) Support mechanism’s to reduce cost/MW for WTM’s
    c) Improve pricing/auction/planning structure & CTU level core compliance monitoring
    d) SMART metering
    e) RPO compliance for states & drivers for same
    f) Engineering & RnD promotion from Center for Wind sector in general
    g) Re consideration of BCD, Safe guard duty on a capacity note. Benefit local players while considering supply from current low cost countries till we regain needed local capacity without disrupting current cost models

  • Kulpati Jha
    Posted at 03:47h, 14 November Reply

    175GW seems too ambitious to achieve. Let’s keep aside the policies, the basic infra (like road, land, logistics, ICDs, Custom offices, transmission network) itself is not capable of physically handle this much volume till 2022.
    Let’s put all efforts to improve the same.

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