Renewable Energy Sector Faces Major PPA Delays, Financial & Infrastructure Challenges

New Delhi, Dec 19 (KNN) India's renewable energy sector is encountering significant setbacks as delays in signing power purchase agreements (PPAs) continue to hamper progress.

According to industry experts, around 80-90 GW of renewable energy projects are in the pipeline, with approximately 40-45 GW facing prolonged delays in securing PPAs.

Kannan Krishnan, Joint Managing Director of Jakson Green, noted that these delays affect all renewable energy projects, including both Fixed Dispatch Renewable Energy (FDRE) and Round-the-Clock (RTC) tenders.

He explained that distribution companies (discoms) are now focusing on projects with higher capacity utilisation factors, contributing to the lag in signing agreements.

Vikram V, Vice President at ICRA, pointed out that the gap between project awards and PPA signings currently spans eight to nine months.

This delay is impacting project execution timelines, as work only begins once PPAs or power sale agreements (PSAs) are finalised.

While bidding activity remains robust, the delay in signing these agreements is stalling the sector's growth potential.

Several factors contribute to these delays, including regulatory uncertainties, financial difficulties faced by discoms, and occasional mismatches between central and state policies.

Additionally, grid infrastructure constraints and disputes over tariff rates further complicate matters. Ravi Shekhar, Managing Director at Eninrac Consulting, emphasised that such delays could result in cost overruns, lower investor confidence, and heightened risk perception.

The delays have been particularly pronounced in recent years. In 2022, only 9.5 GW out of the 15 GW planned was covered by PPAs, with delays spanning 6-12 months.

In 2023, 12 GW out of 18 GW planned were signed, with delays of 8-10 months. Experts predict that in 2024, delays in PPA signings will be between 4-8 months.

Notable projects facing delays include Renew’s 500 MW solar project in Gujarat, which was delayed by 12 months, and Adani Green’s 400 MW wind-solar hybrid project in Andhra Pradesh, delayed by 10 months. Tata Power's 350 MW hybrid project in Karnataka faced a 9-month delay.

Krishnan suggested that while public sector undertakings like NTPC and SECI follow a clear bidding trajectory, a similar offtake calendar for discoms is needed to streamline the PPA signing process.

Shekhar added that financial strain on discoms, tariff disputes, and grid capacity limitations must be addressed to resolve these delays.

(KNN Bureau)