‘RE sector hit harder by COVID-19 than thermal; PSAs not signed for 14.8 GW’

• In the last 6-9 months, India has sanctioned 20 GW of projects. But for 14.8 GW of these projects, PSAs have not been signed, said Jain

• The World Bank RE specialist pointed out that because of the COVID-19 pandemic, the financial stress in the power distribution sector has only worsened

New Delhi: Challenging the predominant view about the renewable energy (RE) sector not being hit by the COVID-19 pandemic, World Bank senior renewable energy specialist Amit Jain has said that the sector has, in fact, been hit harder than the thermal power sector. "The Covid-19 pandemic has hit the renewable energy sector much more than the thermal sector. The thermal sector has long-term PPAs. Even if the PLF goes down to 30-40 percent, they still get Rs 2-3 per unit," said Jain while speaking at a webinar on Evolving landscape of Indian renewable energy investments, organised by CEEW on Friday.

"The World Bank has US$2 billion riding in the market. And I am a little bit concerned about the short-term and medium-term evolving landscape of investments coming to India," said Jain.

'20 GW sanctioned in last 6-9 months, but PSAs not signed for 14.8 GW'

Explaining how the COVID-19 pandemic has impacted the RE sector, Jain said, "When we are talking about 450 GW, we are not talking about the total capacity that has been sanctioned by India. We are talking about operation, construction of projects that are generating electricity. In the last 6-9 months, India has sanctioned 20 GW of projects. But for 14.8 GW of these projects, many of which have been bid out by Central agencies like SECI and NTPC, PSAs have not been signed."

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"I can tell you about exact bids in Punjab, Uttar Pradesh and Tamil Nadu which have been done by SECI and NTPC, where international investors have shed PPAs because PSAs have not been signed for the last 12 years. So, we have a serious problem. 14.8 GW is the official figure which has appeared in the media. But 20 GW is the real number," he added.

"That's why I would like to break the myth that renewable energy has not been hit even marginally by the COVID-19 pandemic. We are terribly hit. And it's a shock," said Jain.

'India not a power-surplus nation'

While pointing out that power procurement is a loss-making proposition in India as discoms buy power but supply it to rural areas and household consumers at a loss and also resort to load shedding, Jain said, "We artificially announce that we are a power-surplus nation which we are not. Because we are shedding. The demand has gone down, and on top of that, we are shedding. So, we have created this bubble of being power-surplus."

The World Bank RE specialist pointed out that because of the COVID-19 pandemic, the financial stress in the power distribution sector has only worsened because there has been a drop in power demand from industrial and commercial consumers, who served as "cash cows" for discoms. Electricity pricing in India works on the concept of cross-subsidy, under which household electricity tariff is subsidised, whereas commercial consumers pay more per unit.

Using this argument, Jain said that at a time when discoms are financially stressed, it would be impossible for them to procure electricity even at Rs 2.36/unit (which was the lowest tariff discovered at a bid conducted by SECI in June this year).

'Innovations like RTC yet to bear fruits'

Jain acknowledged that the innovations made by Central agencies in the bid documents, like round-the-clock (RTC) power supply, are good innovations, but added that they are yet to bear fruits on the ground as PSAs have not been signed. "The last 6-9 months have been challenging and the next 2-3 years are also going to be challenging," said Jain.

"I can propose three solutions. A three-tier mechanism can be structured when a PPA is being sold in the market, as was done in Rewa solar park — a state government guarantee or a World Bank guarantee, a funded ESCO mechanism, and a Letter of Credit. Second, bundling of thermal energy with renewable energy is possible and should be done. And as a fellow panelist mentioned, Gujarat and Rajasthan are going to have 60 GW of PPAs of solar and wind. But where will you consume this 60 GW of power? Either you take it to Delhi or Maharashtra. Or let me make one more proposition. Can we have an under-sea cable to Gulf where we can transfer this 60 GW under the One Sun One World One Grid initiative?," the World Bank expert remarked.

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