IEA flags poor discom health as renewable energy speed breaker

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Published: October 23, 2019 1:43:51 AM

Cash-strapped power discoms often curtail power procurement from renewable energy sources as, thanks to legacy power purchase agreements with thermal power plants, the real tariffs from solar and wind plants end up being much more than what discoms signed up for.

Renewable energy sources decreased their generation by 17% annually in September, in spite of a 14% rise in its installed capacity in that period.

The International Energy Agency (IEA) estimates that the country’s renewable power generation capacity would ‘almost double’ over the 2019-24 period, but cautioned that the growth would depend on the ‘operational and financial performance of its discoms’. Other factors which would impact the pace of adding renewable energy flagged by IEA in its latest ‘Renewables 2019’ report are ‘progress under the green-energy corridors, and schemes to improve access to affordable financing’.

The country has ambitious plans of having 175 giga-watt (GW) by December, 2022. The installed renewable capacity now stands at 82.6 GW. Thanks to the devaluation of the rupee, rising finance costs, government-mandated tariff caps in reverse auctions and cancellation of renewable project tenders, the pace of adding renewable generation capacities slowed down in FY19, when the country added 8.6 GW against 11.3 GW and 11.8 GW added in FY17 and FY18, respectively.

Cash-strapped power discoms often curtail power procurement from renewable energy sources as, thanks to legacy power purchase agreements with thermal power plants, the real tariffs from solar and wind plants end up being much more than what discoms signed up for.

Discoms are finding ways to cut down costs as their financial losses went up by 88.6% to Rs 28,369 crore in FY19. On top of that, the intermittent nature of renewable power also makes them less attractive. Renewable energy sources decreased their generation by 17% annually in September, in spite of a 14% rise in its installed capacity in that period.

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