Only half of India’s tendered 53 gigawatt (GW) solar power contracts are under construction, according to a JM Financial Institutional Securities Ltd report.
The report said, “We find only 50% actually under construction as 35% lack PSAs, while another 14% has been cancelled. Of the remaining 27GW, about 44% includes PSAs with discoms while 56% includes state tenders that have an implicit PSA with respective discoms.”
Fund-starved state electricity distribution companies (discoms) are unwilling to sign power supply agreements (PSAs) with intermediary procurers such as state-run Solar Energy Corporation of India (Seci) for these previously-awarded projects at a comparatively higher tariff.
The report said, “With Seci tenders facing difficulty in getting PSA, the trend is again moving towards individual state tenders, which offer ready PSAs, though they come at great receivables risk of each state discom’s credit rating.”
This comes at a time when the country’s peak electricity demand is growing and breached the 200 GW mark.
According to ICRA Ratings, India’s renewable energy capacity addition will improve to at least 10.5 GW in the current financial year from 7.4 GW in FY21. As per the rating agency, there is a strong project pipeline of 38 GW and an additional 20 GW of clean energy projects being bid out.
Reference- Mint Newsletter, Economic Times, Mercom India, JM Financial Report