Page 7 - AsiaElec Week 12

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Force majeure for Indian green projects
INDIA
INDIA’S Ministry of New and Renewable Energy (MNRE) has allowed wind and solar projects hit by the coronavirus (COVID-19) to invoke force majeure clauses, potentially ending any chance of the country’s meeting its 175GW green target for 2022.
The ministry said in a statement on March 20 that that projects that have seen their supply chains and construction timetables affected by the coronavirus can now apply for extensions to their scheduled commissioning dates.
Much of India’s wind and solar equipment is imported from China, so the country’s renewa- bles industry faces severe problems in building new green capacity on schedule.
Indian developers face strict timetables laid down by capacity auctions held by a range of government agencies such as SECI.
The Indian government has imposed a strict social lockdown on the population; this is expected to hit economic growth.
Without invoking force majeure, Indian solar
and wind developers would face severe fines for delays in building and commissioning their projects.
Government data showed that India had 86GW of renewable capacity, mostly wind and solar, in January 2020, and had installed 9GW in the 10 months to January. Around 2.4GW of this was wind capacity.
This is far below the rate of about 40GW that India would need to achieve to meet the 175GW target for 2022. The disruption caused by the coronavirus across the renewables energy sector means that India has even less chance of meeting this target.
Looking ahead, the country aims to have 450GW of renewable capacity by 2030. The gov- ernment has a longer-term policy to bring down tariffs, improve the contractual and regulatory framework and support investment that makes the target entirely possible. However, the corona- virus dip expected for 2020 as a whole will again ask questions about this long-term target.™
COAL
Coal now unbankable in India
INDIA
COAL power has become largely unbankable in India, with 46GW of proposed coal-fired power projects cancelled in the last 12 months and 600GW in the last 10 years.
India’s electricity sector is now transition- ing away from coal, despite recent slower than expected growth in renewables, the Institute for Energy Economics and Financial Analysis (IEEFA) said in a briefing note.
From April 2017 to January 2020, 19.9GW of coal-fired capacity was added to the national fleet, while 5.6GW of end-of-life coal-fired plants were retired. This net addition of 13.8GW contrasts with the 100GW added from 2011/12 to 2015/2016.
“The slowing growth in India’s coal-fired capacity is reflective of India’s strong energy transition and the country’s growing low-cost renewable energy capacity,” the note said.
Crucially, the note said that 46GW of planned coal projects were cancelled in the 12 months to January 2020, with 600GW cancelled over the last 10 years.
Data from Global Energy Monitor’s (GEM) Global Coal Plant Tracker showed that just 29GW were in the pre-construction pipeline in January 2020, down from 58GW in January 2019.
Furthermore, GEM’s data shows that 37GW of plants are currently under construction in March 2020, and 27GW of projects are under various stages of pre-construction.
This compared with the figures contained in Indian Environment Minister Babul Supriyo’s March 17 statement, which said that 62GW of coal plants were being built.
Looking ahead, the IEEFA predicts that there will be only 30GW of net new additions in the coal-fired sector by 2029/30, which is half what the government’s Central Electricity Authority projects.
“Without subsidy support from the govern- ment (or via NTPC), construction of new non- mine-mouth capacity will be financially risky and unviable,” said the IEEFA’s note.
This is the result of “severe financial stress in the thermal power sector and the unrelenting competition from ever-cheaper renewables,” said the IEEFA.
With large numbers of cancellations, the fall- ing cost of renewables and bankrupt distribution companies, coal is no longer a good investment option. The IEEFA called India’s stranded asset risk “massive.”
It values the risk to the coal-fired project pipe- line at $40bn, in addition to $40bn of non-per- forming assets in the distribution sector and another $20bn in the gas-fired sector.
The IEEFA has urged the government to turn to gas-fired capacity, battery storage, wind and solar, as well as improved metering and smart-grid technology, to create a more invest- ment-friendly power sector that can meet rising demand.™
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