Bribery charges against India’s Adani Group reveal growing problems renewable energy developers face in the country finding buyers for their power generation.
India’s central government wants to shift away from polluting coal-fired power generation to solar and wind power, but officials say state government-owned power distribution companies have been slow to strike renewable energy purchase agreements.
US authorities claim billionaire Gautam Adani designed a $265 million scheme to bribe Indian state officials He began pursuing solar power deals after one of his companies failed for years to find a buyer for a $6 billion project. Adani Group denies the allegations.
Also read: Adani bonds fall, India’s parliament shuts down amid bribery scandal
But the group is not the only conglomerate facing growing delays in signing buyers for renewable energy developed in coal-reliant India, the world’s third-largest emitter of greenhouse gases.
Coal accounted for 75% of India’s electricity generation in the year to the end of March, with renewables such as solar and wind (but not hydropower) accounting for about 12%.
State Grid is not ready for renewable energy
India is still more than 10% short of its much-publicized commitment to add 175 gigawatts (GW) of renewable energy generation by 2022. It has ambitious targets for non-electricity generation.
In the five years to March 2028, it plans to tender more than four times the capacity of renewable energy projects it commissioned in the previous five years.
To push states to help meet India’s overall goals, New Delhi introduced a so-called Renewable Purchase Obligation (RPO) in 2022, requiring states to increase their adoption of clean energy to double the national share by March 2030. 43.3%.
Complying with these RPOs will require 20 of the 30 provinces monitored to more than double the share of green power in their electricity mix, a February report from government think tank NITI Aayog showed.
The problem is that Indian states are unprepared for the rapid growth of renewable energy generation capacity – they lack adequate transmission infrastructure and storage, and would rather rely on fossil fuel supplies than risk “intermittent” renewable energy.
Industry leaders say the solar industry also faces a lack of government funding and skills shortages. Manufacturers of solar panels, cells and storage batteries face rising costs that could threaten India’s ability to reduce its carbon footprint and meet its climate commitments.
The Modi government has 40% tariff levied China accounts for 25% of solar panels and 25% of batteries, while allocating about $3 billion in production-related incentives to local manufacturers as part of a plan to achieve net-zero carbon emissions by 2070.
But industry chiefs say New Delhi needs to increase funding and training programs to meet its clean energy goals.
Skilled labor shortage
Another major issue is Shortage of technical talentsDwipen Boruah, Managing Director of Renewable Energy Consulting said GSES IndiaThe organization has trained more than 7,000 people in renewable energy technologies and wants New Delhi to significantly increase subsidies for education and training in the field.
“Hundreds of private institutions avail themselves of these subsidies but provide sub-standard training,” he said, adding that small subsidies – often just a few thousand rupees per student – hinder effective education.
Borua and other industry executives point out that while India produces more than a million engineering graduates each year, traditional universities are ill-equipped to teach solar, wind and other renewable technologies.
Some senior officials said the government’s current training budget of around Rs 500-600 crore should be increased 10 times.
Two weeks ago, India’s Renewable Energy Minister Pralhad Joshi announced the formation of a joint group of industry representatives to address key issues, including training, to achieve clean energy goals.
It is predicted that the renewable energy industry faces a skills gap of approximately 1.2 million people, and demand is expected to increase by 26%, with 1.7 million skilled workers required by 2027 Team rental serviceIt is a talent dispatch company that cooperates with industry and government for training.
President Ashwani Sehgal said the “skills gap is present across all industry levels,” especially in emerging technologies such as battery manufacturing, battery storage and advanced grid integration. Indian Solar Energy Manufacturers Association.
“The industry faces a brain drain of nearly 20% every year, posing risks to production plans.”
Earlier this year, the government proposed to strengthen support for skills improvement and relax policy restrictions. visa restrictions Many companies say expensive imported machines sit idle due to a lack of skilled workers, leading to increased pressure on Chinese technicians.
Vaishali Nigam Sinha, Co-Founder renewOne of India’s largest renewable energy companies, with nearly 10 gigawatts of capacity, said skills shortages are one of the most “underestimated barriers” to the energy transition.
“A lack of skilled engineers, technicians and project managers is driving up operating costs,” she said, a concern echoed by some industry executives.
Tata Power has 6 GW of renewable energy generation capacity and has set up 11 training facilities to provide training to 300,000 young people in solar installation, battery management and other green technologies.
“A skilled workforce is critical to accelerating project deployment, ensuring efficient operations and maintenance, and driving technological innovation,” said Himal Tewari, the company’s chief human resources officer.
Power demand does not match state infrastructure
Challenges faced adani greenFor India’s largest renewable energy company, the situation has been grim. It took the company nearly 3 1/2 years to secure supply deals with buyers for all 8 gigawatts (GW) of solar power capacity it won in a tender widely publicized as the country’s largest.
R Srikanth, Energy Industry Consultant and Dean national institute of advanced studies indiasaid there was “no point” in setting tender targets and signing contracts if interest from distribution companies was so low.
Srikanth said the charges now facing Adani could lead to a further slowdown in renewable energy as low-cost financing from foreign investors could become more difficult.
Changes in some tendering methods have exacerbated delays in the completion of renewable energy projects.
The tender won by Adani Green is the first major contract awarded by state-run Solar Energy Corporation of India (SECI) without a state-guaranteed power purchase agreement (PPA).
SECI said when it announced the news in June 2019 that buyers were guaranteed, but that clause was withdrawn from the agreement signed a year later.
SECI’s chairman told Reuters last month that tenders for renewable energy projects had tripled, resulting in 30 gigawatts of projects having been tendered but without a buyer yet.
“You can’t expect states to respond and start signing triple power supply deals,” RP Gupta told Reuters in an interview, adding that “a demand pool has to be created” and states must be “sensitive” to renewable energy.
Brokerage JM Financial said it now takes eight to 10 months from contract award to sign a power supply agreement.
In comparison, companies awarded contracts between July 2018 and December 2020 took about three months to reach supply agreements, SECI data showed.
“A sudden surge in bids, a large number of ongoing projects, a mismatch between power demand and the bid pipeline… and constraints on timely execution of projects have led to delays in contracting,” JM Financial said.
Renewable energy projects have also been cancelled, with about 4%-5% of all tenders canceled, and there is a backlog in transmission infrastructure development, Gupta said.
Lakshnath, former chairman of India’s Central Electricity Authority, said one solution is to know how much power buyers want before bidding on a project.
“Giving buyers confidence before tendering is likely to minimize delays in signing power supply agreements,” he said.
- Reuters Additional editing by Jim Pollard
See also:
Bangladesh wants legal help investigating Adani and power deals
Adani scandal raises risks for global banks and India’s renewable energy development
India’s solar and wind power surge in pursuit of green goals
Indian oil tycoon says new energy sources will be as profitable as refineries
Climate change ‘fuels’ rainfall, triggering deadly landslides in India
India is now the world’s third largest solar power generator
China’s solar industry faces years of oversupply and low prices
China’s wind and solar power generation will exceed coal for the first time
