Energetica India 89 - May 2020

Indian Renewable Energy Sector and COVID-19: An Overview and Road Ahead The government’s response in COVID-19 situation to address the issues related to supply chain disruptions, RE curtailment and cash-flow crunches has been timely. However, the current situation should also be viewed asan opportunity for course correction to bring about structural changes involving financing, manufacturing, and con - tract enforcement in the RE sector. Going forward, this will pave the way for a smoother and more effective energy transition. The renewable energy (RE) sector in India has gained signif- icant momentum in the last five years, mainly driven by the Paris climate commitments and an ambitious target of setting up 175 GW of RE capacity by 2022. As per the Ministry of New and Renewable Energy (MNRE), India has 87 GW of RE capacity installed and 34 GW under construction, with another 30 GW in the process of bidding and tendering, as of April 2020. Many policy initiatives have been taken in the recent past to promote growth in the sector—these include removal of tariff caps, support for the KUSUM scheme in the budget, and the launch of Phase-II of the Grid Connected Rooftop So - lar Programme. It was expected that these policy measures would boost RE deployment in the coming years. However, the COVID-19 pandemic has significantly impacted the growth in the RE sector in India. Amid the global crisis followed by an extended national lock - down, it is crucial to take stock of how the current situation is affecting both the operational and under-development proj - ects and how it would impact the landscape of the sector in the medium term. Impact on existing and upcoming projects and short-term fixes Around 21 GW of solar capacity, that was in various stages of implementation as of February 2020,would be impacted by the pandemic.This is on account of complete disruption in the sup- ply chain due to unavailability of imported modules, inverters, labour, and other domestic materials such as cable trays and electrical parts.To address this issue, the MNRE has now di - rected respective implementing agencies to treat this epidem - ic as a force majeure event.It has granted a blanket extension for all projects under construction,without project-to-project scrutiny, thus relieving the agencies of administrative burden and avoiding the chances of future litigations. Despite a prolonged lockdown, operational projects including utility-scale solar and wind, totalling ~70 GW, are allowed to operate, although with limited O&M staff. But given the fall in demand from commercial and industrial consumers and defer- ral of offline payments, discoms’ revenues are disappearing. There are concerns over their ability to pay for renewable en - ergy generation, considering payments were being delayed to generators even before the pandemic. This has been a legacy for the power sector and requires long-term fixes. Rooftop solar (RTS) and open access projects are the most affected in the RE sector, owing to a complete breakdown of their revenue streams.This is especially evident for project de - velopers in the operational expenditure (OPEX) segment. The deemed generationis not being off-taken by the consumers as their factories and offices are closed.In addition, state regu - lators have either retained tariff rates of the previous financial year (such as in the case of Gujarat) orhave reduced retail tariff rates for all consumer categories (such as in the case of Maharashtra), which is likely to dampen the sentiment of consumers willing to opt for rooftop solar and open access, at least in the short term. Given the small risk appetite of the industry, the legacy of under-achievement of targets, and the potential for local job creation, it is important to pay more attention to the RTS in - dustry. Some of the immediate fixes could include waiving off banking charges or carrying forward banked energy from RTS and open access projects beyond the settlement period, which would otherwise lapse at the end of the financial year. In fact, the MNRE has directed three states – Gujarat, Karnataka, and Tamil Nadu to permit roll-over of banking arrangements beyond the settlement period, and is expected to extend it to other states as well. 52 energetica INDIA- May_2020 Gandhar Ukidve Research Analyst, Council on Energy, Environment and Water (CEEW)