Tamil Nadu overtakes Karnataka to become No 1 in renewable energy

Tamil Nadu has overtaken Karnataka to become India's top renewable power generating state in FY20 (till October).

Of the total renewable power generation in the country, nearly 17.2 per cent was from Tamil Nadu. According to Central Electricity Authority (CEA) data in 2019-20 (upto October) 85,774.92 million units (MU) of power was generated through renewable energy, of which 14,771.69 MU was generated by Tamil Nadu followed by Karnataka (14,730.08 MU), Gujarat (10,505.54), Andhra Pradesh (9,638.70), Maharashtra (8,942.55) and Telangana (3794.99 ).

Wind was the major source of renewable energy in the state. Of the total generation, 11,614.85 MU came from wind, followed by 2,733.37 MU from solar and rest are from other sources.

Tamil Nadu's wind energy capacity is 8,480 MW, which is 24 per cent of the country’s total wind generation capacity.

State is aiming to achieve 9,000 megawatt (MW) of solar power by 2023, as part of which a new Solar Policy had come into effect in 2019. At present, the total solar capacity is above 3,000 MW.

The policies and incentives offered by the government — bundling of wind power projects, accelerated depreciation, a Technology Upgradation Fund etc — have driven the state’s power-intensive industries to invest in captive wind power plants, says industry representatives.

Wind generation peaks during the southwest and northeast monsoon months, followed by below average generation for the remaining months. The state introduced banking of energy, which allows the cooperatives to supply to the grid when there is excess generation, in exchange for free supply during low generation periods.

Renewable power firms stare at bleak cash flows, defaults in Andhra Pradesh

Renewable power project developers are staring at weak cash flows from their projects in Andhra Pradesh.

Not paid by the state for a year already, these companies fear that payment will remain stalled till legal clarity emerges on the state's decision to renegotiate tariff of all renewable projects.

Sector executives said that the unpaid dues total up to Rs 7,000 crore for the past year.

"Through this highly illegal and non-contractual decision to review and bring down tariff, Andhra has landed a lot of players in the soup. Dues of more than Rs 7,000 crore were already there. Owing to the weak cash flow, a lot of smaller companies are staring at a default," said a senior executive of a leading renewable company.

Sources said there are three solar companies that have defaulted on loans for their power projects in the state. The companies could not be reached for confirmation. 

Last month, the newly formed Andhra state government led by YSR Congress formed a high-level negotiation committee (HLNC) to "review, negotiate and bring down" tariff of all renewable power projects, including the ones that were awarded through bidding.

Indian Wind Power Association, along with a dozen wind power companies and a couple of solar companies, including ReNew Power, ACME Solar and Waaree Energy, moved writ petitions to the Andhra Pradesh High Court.

The HC stayed the proceedings of the HLNC. The next hearing on the matter is on August 22.

Andhra, in its order to review the "high tariffs", cited the poor financial status of its power distribution companies (discoms) as the reason to review the tariff.

The state discoms have dues of Rs 20,000 crore. Its annual net income stands at a loss of Rs 1,563 crore, as last updated on the UDAY portal.

Despite the losses, power distribution companies in the state would provide a subsidy amounting to Rs 5,000 crore. The beneficiaries would be farmers, scheduled castes and scheduled tribes as well as aquaculture farmers, said the order of the AP Electricity Regulatory Commission. 

Chief minister Y S Jaganmohan Reddy had promised free power to farmers after he was sworn in recently.

India Ratings, in a report last month, said renegotiation of contracts not only creates anxious times for the sector but also magnifies the risk a project could undergo during its power purchase agreement (PPA) tenure.

"Notwithstanding the outcome of the committee's decision, reopening of PPAs will dent investor sentiment. Additionally, banks will be forced to recognise these assets as non-performing if payments are stopped, thereby creating further stress for the lending sector," it said.

Soon after taking over as CM of Andhra Pradesh, Reddy cancelled all MoUs signed by previous governments.

He also cancelled announced and under-construction infrastructure projects and formed a committee to review and bring down the tariff on renewable energy projects.