Year 2022 wasn’t a particularly good one for the renewable energy sector. The wind industry believes the regulations to be destructive, while solar sector is not growing fast enough. So, both are likely to face headwinds in 2023.
In April–November 2022, India added just 1,538MW of wind power, marginally better than 1,110MW in the pandemic-hit year of 2021-22. For solar, the numbers are 7,970MW for April–November, 2022, compared with 13,911MW in 2021-22. The renewable energy industry feels it is overburdened by needless regulations.
One common niggle that both wind and solar sectors have is the reduction of the leeway allowed under the ‘deviation settlement mechanism’. The Power Minister, RK Singh, has set up a committee to look into the grievance, but unless the Deviation Settlement Mechanism (DSM) rules are reversed, renewable companies will have to pay penalties or forgo payment, if their supply deviates from the schedules beyond a narrower band than before.
Reverse auction
The reverse auction system, brought in 2017, in which bidders openly bid against each other after their quotes are opened, has not delivered capacities, as is evident in the low amount of wind installations in the last few years. Yet the government has not changed tack.
The industry says that government only sees that reverse auctions have resulted in low tariffs but disregards that capacities are not coming up. Singh had promised that the auction method would be changed to ‘closed auctions’, which is the norm everywhere else, but nothing has changed, beyond constituting a committee to examine the issue. “The committee, inter alia, recommended to adopt State-specific single stage two envelope closed bidding process,” Singh told the Parliament on December 8. But the matter rests there. But industry sources say that the government has been looking into State-specific bidding for over four years.
The ‘bulk procurement through reverse bidding’ method of awarding capacities has also killed off the small capacity segment. Earlier, MSMEs would put up some small capacities, from single digit numbers to 20-25 MW, either for getting power captively or to save tax through depreciation, but segment has vanished because no discom would buy their power.
Wind
The wind companies are also irked over the sudden ushering of new, ‘generation temperature’ rules for certifying wind turbines. The rules essentially mean that each turbine would have to be site-specific, with regard to the ambient temperature. This will only increase the cost of the turbine.
Furthermore, with airports popping up everywhere, locating wind projects is becoming difficult, sources say. Even if they could get the approvals, the time taken for that squeezes the time available within the deadline for putting up the projects.
Wind tendering slowed down during the year. The 13 th round opened in January 2022, but the bids hadn’t been opened as of mid-December, presumably, the government has shifted focus on wind-solar hybrid projects. However, only 5,420 MW have been bid out and only 1,440 MW commissioned, as of mid-December.
Solar
Solar energy companies are unhappy that the ‘solar’ slice of the renewable purchase obligations, has been done away with — which could potentially affect demand. The government also suddenly shut an import route under ‘project imports’ for solar cells and modules, which would impact the viability of the projects already won through auctions. Furthermore, solar module prices are rising, thanks to supply constraints in China. They have risen from lows of around 18 cents a watt a year ago to about 32 cents now, with an upward bias.
Green mix
As on November 30, 2022, India had 41,895 MW of wind, 61,966 MW of solar and 10,725 MW of biomass, and 166,363MW of total renewable energy capacity, Including small and large hydro. To meet India’s international climate commitments, this number must triple by 2030. Nobody believes this is possible under the existing regulatory framework.