Power News We love to talk!

FEB 18 2015

Renewable energy: Hype is bad for the industry

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 18th FEB 2015

The magnitude of “commitments” made by the 200-odd companies for setting up 266,000 MW of solar and wind power projects in the next five years has evoked calls for caution. Industry experts point out that given the issues such as financing, land acquisition and grid, expectations have to be tempered.

“Given the base we are at, of around 30,000 MW (of installed capacity), 266,000 MW in five years looks high,” says Santosh Kamath, Partner and Head-Renewables, KPMG. At a conservative estimate, 1 MW of solar would call for Rs. 7 crore, and 1 MW of wind about Rs. 6.5 crore.

Even assuming a still lower estimate of Rs. 6 crore a MW, 266,000 MW would require Rs. 16 lakh crore. At a debt-equity divide of 70:30, equity required would be close to Rs. 5 lakh crore, or roughly $80 billion, over the next five years.

“Against 266 GW of commitments, banks have offered funding commitments of only 78 GW,” says Arunabha Ghosh, CEO of the Council on Energy, Environment and Water, a Delhi-based think-tank.

Even the 100-GW solar target of the Ministry of New and Renewable Energy would call for $160 billion, says Ghosh.

Other challenges are transmission and distribution of power, the two elements of which are grid infrastructure and financial health of distribution companies.

Ashwin Gambhir of Prayas Energy Group, points to: financial viability of the distribution sector, ensuring project development and land use, and issues relating to grid. “All this would require effective and innovative mechanisms,” he says. Ghosh speaks of the need for overall credit guarantee and payment security. Many solar developers that BusinessLine talked to said that while the commitments reflect the rise of renewable energy, unrealistic targets lead to a bad name.

Tags

Delhi Distribution Companies Grid Renewable Energy Payment Security Wind Wind Power Land Acquisition Ministry of New and Renewable Energy Energy Power KPMG Solar

Related News

  • NGT declines to modify SC order on BS-III vehicles  Read more
  • 2022 is deadline for Polavaram power project  Read more
  • Energy dues: Power firm, civic body lock horns in Gaya  Read more
  • MNRE implements plan to promote small sind energy and hybrid systems  Read more
  • Indias coal reserves could remain unused in future: Minister Piyush Goyal  Read more
  • States with large power deficits not buying cheap spot power, heres why  Read more
  • Aditya Birla Nuvo to develop solar plants with Abraaj Group  Read more
  • People hit hard by shortage of power and water  Read more
  • Amplus Energy Solutions in talks to raise up to $100 million  Read more
  • Coalscam: CBI supplies docs to Jindal, other accused  Read more