Renewable energy as a theme has received significant traction in India in the last few years, with CareEdge Ratings noting that the future outlook remains positive. But challenges, like execution related bottlenecks, imposition of basic customs duty and supply chain issues and more, persist.
Here is a look at some of the key challenges the industry is currently facing.
Land Acquisitions
Acquiring land for renewable energy projects in states continues to be a key challenge in the sector. As per companies, as well as analysts, the availability of open access remains an area of concern due to state specific procedural issues. Further, high cross subsidy surcharges and additional surcharges also create hurdles to development of an open power market.
India should have modern ways to develop land for wind energy, according to Suzlon Energy Ltd.'s management. States are now agreeing for exclusive rights for wind development, which helps solve certain problems in the space, Chief Executive Officer JP Chalasani told NDTV Profit.
R P Gupta, Managing Director of the Solar Energy Corporation of India, suggests that floating solar facilities presents a viable solution to circumvent land acquisition challenges. At a recent event, Gupta referred to the PM Surya Ghar Muft Bijlee Yojana, which aims to deploy 30-GW solar rooftops within the next one-two years, as a strategic move to bypass land related issues
Disribution Company Payments
As of December 2023, distribution companies owed power generators Rs 65,595 crore in total dues. The states with the highest debt were Maharashtra, Uttar Pradesh and Tamil Nadu. Several key distribution companies continue to remain financially stressed and have relatively high 'aggregate technical and commercial' loss levels, which impact the long term sustainability in the sector, according to CareEdge.
However, it is key to note that losses of State Electricity Boards have reduced. As per Jefferies, losses have reduced to Rs 0.39 per unit from Rs 0.84 per unit in FY13-23. This improved performance is due the implementation of the Late Payment Surcharge scheme that was introduced in fiscal 2023 to address this same issue.
Lower Storage And Thermal Capacity
One of the major concerns of renewable energy is the fact that sources like solar and wind cannot supply power 24x7. This is where the the necessity of building energy storage capacities comes in. While the renewable energy pipeline in the country remains healthy, the pending buildup of energy storage capacities is a key concern. This comes at a time where the current pipeline of thermal capacity under construction remains quite limited.
While the government has kickstarted a plan to add 80 gigawatts of fresh thermal capacities, the longer lead time of these capacities raises concerns. This is something that is yet to be addressed.
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