According to Sumant Sinha, chair of Goldman Sachs-backed ReNew Power, investors could be put off India by Andhra Pradesh state’s difficult relationship with renewable energy companies
November 02, 2019. By Huned
At a time when delegates at the Asia Clean Energy Summit hosted at Singapore were full of praise for India’s efforts in developing renewable energy and taking it to the next level and German Chancellor Angela Merkel making positive observations about the country’s commitment to sustainable solutions, there’s some negative news too. According to Sumant Sinha, chair of Goldman Sachs-backed ReNew Power, investors could be put off India by Andhra Pradesh state’s difficult relationship with renewable energy companies.
India, the world’s third-largest emitter of greenhouse gases, wants to raise its renewable energy capacity to 500 gigawatts (GW), or 40% of total capacity by 2030. But the state has been curtailing power procurement from renewable energy companies, citing high prices, and pushing to renegotiate its supply contracts with them. “There are questions on what this means for sanctity of contracts in India. That has made investors jittery,” Sinha told the Reuters news agency.
Foreign investment is central to India’s green energy ambitions, and a slowdown in overseas funding could hurt Prime Minister Narendra Modi’s commitment to increase adoption of renewable energy. “The longer the issue carries on, the less likely the renewable energy target will be met,” Sinha said. ReNew Power has an installed capacity of more than 5 GW and plans to add another 3 GW by mid-2021. India’s federal government, the state-controlled NTPC Ltd., Solar Energy Corporation of India and the Japanese ambassador to India have all asked Andhra Pradesh not to try to renegotiate renewables contracts.
In August this year, a court in Andhra Pradesh ordered state transmission companies to refrain from carrying out “arbitrary and discriminatory” practices towards power generating firms. Andhra Pradesh, which accounts for about 10% of India’s renewable energy capacity, owes green energy generators Rs 25.1 billion (USD 353.5 million). That is the highest of any state in India and accounts for a more than a quarter of all dues owed by province-owned distribution companies, according to latest data published by the Central Electricity Authority (CEA).
But Sinha said late payments by distribution companies overall was not as severe as it had been a few years ago. Along with land acquisition, delayed payments are seen as a major challenge to the growth of the renewable energy sector in India. “With the exception of states like Tamil Nadu and Andhra Pradesh, most states have started paying on time,” he said.
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