INDIA'S RENEWABLE ENERGY CRISIS: 44 GW POWER PROJECTS FACE CANCELLATION! Will Green Dreams Turn Sour?

India's renewable energy sector, which has achieved record milestones with over 250 GW of non-fossil fuel capacity and renewables contributing 30% to electricity output, now faces a significant challenge. Approximately 44 GW of planned renewable energy capacity, authorized by government agencies like SECI, NTPC, SJVN, and NHPC through Letters of Intent (LoIs), is at risk of cancellation. This is primarily because electricity distribution companies (discoms) are unwilling to finalize Power Sale Agreements.

Discoms cite two main concerns: the cost of power and the distant start dates for energy supply. They are influenced by past ultra-low solar and wind tariffs (around ₹2.50/kWh) and find current tariffs for more advanced, dispatchable renewable energy (FDRE) at ₹4.98–4.99/kWh too high. The Ministry of New and Renewable Energy (MNRE) has acknowledged the issue, partly blaming aggressive tendering, and stated that not all 44 GW will be scrapped. The Ministry plans to explore all options, including convincing states to agree to power offtake and only cancelling projects for which no buyer can be found.

Potential solutions being developed include converting uncontracted LoIs into Contracts for Differences (CfDs), where the central government would absorb the price difference between what developers are paid and what discoms are willing to pay. Additionally, the Central Electricity Regulatory Commission (CERC) is creating a framework for virtual Power Purchase Agreements (VPPAs), which could enable developers to sell power on the open market and transfer Renewable Energy Certificates to corporate buyers. These measures aim to prevent any capacity with an LoI from being cancelled.

Impact: If this situation is not resolved, it could significantly hinder India's renewable energy expansion goals, dampen investor confidence, and affect the country's climate commitments. The failure to secure power purchase agreements for such a large capacity could lead to project cancellations, impacting the growth trajectory of the renewable energy sector and its contribution to the national grid. Impact Rating: 8/10

Difficult Terms: Discoms: Distribution companies that supply electricity to consumers. GW: Gigawatt, a unit of power equal to one billion watts. LoI: Letter of Intent, a preliminary agreement. SECI: Solar Energy Corporation of India, a government agency. NTPC: National Thermal Power Corporation, a major power generation company. SJVN: Satluj Jal Vidyut Nigam, a power generation company. NHPC: National Hydroelectric Power Corporation, a hydropower generation company. Power Sale Agreement (PSA): A contract for buying and selling electricity. MNRE: Ministry of New and Renewable Energy. CERC: Central Electricity Regulatory Commission, which regulates electricity tariffs. kWh: Kilowatt-hour, a unit of energy. FDRE: Firm and Dispatchable Renewable Energy, which guarantees power supply on demand. CfD: Contract for Differences, where the government covers the price gap. VPPA: Virtual Power Purchase Agreement, a financial tool to buy renewable energy without direct ownership. REC: Renewable Energy Certificate, proving generation from renewable sources.