India's Renewable Energy Sector Faces Challenges Amid Weak Demand and Project Cancellations
India's renewable energy sector faces challenges due to weak demand, project cancellations, and delays in power sale agreements. With 40 GW awaiting approval and 38.3 GW canceled, achieving the 2030 clean energy goal is at risk. Read more about the hurdles and solutions.
kowshik Reddy
India's ambitious renewable energy goals are encountering significant obstacles, as highlighted by a recent report from the Institute for Energy Economics and Financial Analysis (IEEFA). The report underscores issues such as low demand for tenders, delays in power sale agreements, and a notable number of project cancellations.
Key Findings from the IEEFA Report:
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Tender Subscription Shortfalls: In 2024, India issued 73 gigawatts (GW) of renewable energy tenders. However, 8.5 GW of these tenders remained unsubscribed. This shortfall is attributed to complex tender structures and delays in preparing interstate transmission systems.
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Pending Power Sale Agreements: The cumulative capacity awaiting power sale agreements has surpassed 40 GW. Notably, the Solar Energy Corporation of India (SECI) accounts for 12 GW of this pending capacity, indicating potential bottlenecks in the contractual processes essential for project advancement.
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Project Cancellations: Between 2020 and 2024, approximately 38.3 GW of renewable energy capacity was canceled. These cancellations stemmed from issues related to tender design, project location challenges, and technical difficulties. Such a high rate of cancellations raises concerns about the robustness of project planning and execution within the sector.
Implications for India's Renewable Energy Goals:
These challenges pose significant risks to India's target of achieving at least 500 GW of non-fossil fuel capacity by 2030. The country's previous goal of adding 175 GW by 2022 was not met, with fossil fuels still accounting for over two-thirds of total power generation last year. The current hurdles could dampen investor interest and limit access to low-cost financing, both crucial for scaling renewable energy infrastructure.
Government Initiatives and the Path Forward:
To address these issues, the Indian government has launched initiatives like the PM MITRA scheme, aiming to balance rapid growth with sustainability. However, the effectiveness of these measures in overcoming the highlighted challenges remains to be seen. A concerted effort involving policy reforms, streamlined processes, and stakeholder collaboration is essential to revitalize the sector and align with the nation's renewable energy aspirations
