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NEW DELHI: In March last year, the Uttar Pradesh power regulator issued draft regulations on net metering for renewable energy companies. Net metering is a billing mechanism where solar producers are paid by distribution companies for the power they generate after offsetting for their internal consumption. Stakeholders’ meetings were held and the regulator followed all the standard procedures, but the final regulations ended up being way different than what had been discussed for months with the industry.In the final regulations, dramatically, only residential and private tube wells were deemed eligible for Net Metering benefits — discouraging solar players to take part in the solar vision of the Yogi Adityanath government-envisaged UP Solar Policy 2017, which was the most attractive feature of the Investment Meet held in February 2018.UP is not the only state that has been creating regulatory uncertainties in the renewables space.Each state in India, in its unique way, is putting obstacles to the green energy space that was once considered a sunshine sector. Apart from the Andhra Pradesh government’s infamous bid to renegotiate renewable contracts, governments in Telangana, Maharashtra and Tamil Nadu are also not letting green plants breathe easy, despite the fact that these projects enjoy ‘must-run’ status. Sources said states were forcing renewable energy projects to shut operations during productive hours of the day, citing grid security issues.The Centre is trying to put together data on such curtailment.
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Growth of India’s renewable energy sector was at a five-year low last year. Renewable energy generation grew at 5.7% till October 2019, as against 28.5% in the same period of the previous year. It was 25% for the last full-financial year, data available with the Central Electricity Authority shows.While the Central government looks keen to ramp up renewable energy generation in the country by leaps and bounds, the states do not look very enthusiastic on the green energy front given the overhang of contracted capacity and slack demand.Renewable energy ministry officials said curtailment of generation by states, weak finances of state power distribution companies and slowdown in overall electricity demand are the key factors behind the low renewable energy generation. The growth has been around 20% per annum in the last five years. Data prior to 2014 is not available.Industry sources said Andhra Pradesh, Telengana, Tamil Nadu and Rajasthan are some of the states curtailing renewable power even though the projects enjoy a ‘must-run’ status.India has stated its intention to reach 450 GW of renewables by 2030 at the United Nations Climate Action Summit 2019. It targets 175 GW of the green power by 2022, against 86 GW installed capacity now of the 369 GW total capacity.Rajasthan, in its much-awaited Solar Policy, has placed sufficient impediments to discourage solar capacity addition in the state by private players. It has increased contribution to state renewable fund by solar parks selling power outside the state to as high as Rs 2.5 lakhs to Rs 5 lakhs per mw per year for 25 years. Secondly, it added to woes of the plants by asking registered projects for re-registration. The state discourages commercial and industrial consumers to put up solar plants by imposing grid support charges. Maharashtra too has proposed to impose grid support charges on rooftop solar projects.A few years back, Karnataka had gone against legal precedence and revised the banking energy benefits for developers on retrospective basis. To the good luck of renewable energy developers, legal wisdom prevailed and the projects were rescued.However, despite legal interventions such as those in Andhra Pradesh’s case, contract enforcement has remained a major challenge in the sector. Like developers of thermal power plants, renewable energy units have huge receivables from state power distribution companies. This further adds to the plight of renewable energy developers and leads to dampening of investor sentiment.The Supreme Court had in 2014 issued clarifications on the importance of renewable energy and empowered regulatory commissions to issue targets for renewable purchase obligations. States that are not able to generate renewable energy as per targets can purchase these RPOs from states which are abundant in such plants. Despite a push from the Centre, many regulators, however, are yet to get the RPO regime implemented as per the Supreme Court order.Ratings agency ICRA has revised the year-end outlook for the renewable energy sector to negative from stable. It says the sector is facing headwinds because of delays in payments by state distribution utilities, project execution delays due to land acquisition issues, no transmission connectivity and lack of timely financing.”The headwinds related to payment delays, uncertainty over resolution of tariff issue for projects in Andhra Pradesh; as well as execution and financing-related challenges for under-construction projects have impacted investor sentiments in the sector. This is reflected from the slowdown in tendering of wind and solar PV projects by 37% to 10.6 GW in 9M CY2019 from 16.7 GW in the corresponding period of previous year. Moreover, many of bids called by central nodal agencies remained under-subscribed,” ICRA group head and senior vice president (corporate ratings) Sabyasachi Majumdar said.
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