November 13, 2019
Nearly 3.3 gigawatts (GW) of wind and solar projects under development and 7.4 GW of operational wind and solar projects in the Indian state of Andhra Pradesh may be affected by new proposals of its local government and electricity regulation commission, based on Rystad Energy’s latest research.
The recently elected state government, led by Chief Minister Jaganmohan Reddy, shocked those in the renewable energy sector with a proposal to revise the power purchase agreements (PPAs) signed between the previous state government and developers.
“Should the proposals from the new government of Andhra Pradesh be implemented, we estimate that India will reach around 53 GW of its 60 GW target of utility scale solar capacity by 2022,” remarked Sushma Jagannath, an analyst on Rystad Energy’s renewable team in Bangalore.
The road to achieving India’s total renewable energy target of 175 GW of combined installed solar, wind, small hydro and biomass projects by 2022 is already fraught with challenges, such as tariff caps in auctions, land acquisition and the imposition of safeguard duties on imported solar panels.
“India’s ambitious renewable energy target, its pledge at the Paris Climate accord, and its favor in the eyes of foreign investors may be compromised as a result of this proposal,” warned Jagannath.
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This potential disregard of past contractual agreements – along with regular curtailment of renewable energy facilities and delayed payments by the state’s distribution companies (DISCOMs) to developers in the state – may drive foreign investors to reassess whether India’s renewable energy sector can be viewed with the same optimism as a few years ago. Three of Andhra Pradesh’s top renewable energy developers (Greenko, ReNew Power and Mytrah Energy) are backed by foreign investors.
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Rystad Energy is an independent energy research and business intelligence company providing data, tools, analytics, and consultancy services to the global energy industry. Our products and services cover energy fundamentals and the global and regional upstream, oilfield services and renewable energy industries, tailored to analysts, managers and executives alike. Rystad Energy’s headquarters are located in Oslo, Norway with offices in London, New York, Houston, Aberdeen, Stavanger, Moscow, Rio de Janeiro, Singapore, Bangalore, Tokyo, Sydney and Dubai.