Telangana state electricity distribution companies (DISCOMs) have not paid outstanding dues of around ₹3,200 crores to solar power developers, two people in the know said, requesting anonymity.
The last payment made by the state DISCOMs was for electricity supplied till March 2020. The development may dent India’s image as a green energy champion, they added. Solar firms, such as Acme Solar, Rays Power Infra, Goldman Sachs-backed ReNew Power, Actis Llp’s Spring Energy, Global Infrastructure Partners’ Vector Green Energy, and GIC Holdings Pte. Ltd-backed Greenko, have not received any payment from the DISCOMs since then.
Telangana’s 3.6 gigawatts (GW) installed solar power generation capacity was set up with an investment of about ₹20,000 crores.
India has also been witnessing certain regulatory uncertainties in green energy contracts in Gujarat, Andhra Pradesh, and Punjab. At the same time, several deals are in play.
To be sure, cash-strapped distribution firms from across states owe ₹1.27 trillion to power generation companies (gencos) as of January, according to data available on the Union power ministry’s PRAAPTI portal.
In a letter to Telangana chief minister K. Chandrashekar Rao, Telangana Solar Power Developer’s Association said: “Some projects have already become NPAs (non-performing assets) for non-payment of installments to lenders and almost all of them are on the verge of becoming NPAs .” The letter was reviewed by Mint.
“This present financial position of our projects is also hurting the business sentiments of global investors to invest further in the state,” it added.
The development is significant as ₹4.7 trillion has already been invested in India’s renewable energy space in the last six years, with an expected ₹1 trillion investment opportunity each year till 2030.
“While there have been payment delays in other states as well, we haven’t seen anything along the lines of Telangana and Andhra Pradesh,” said a senior executive of a solar power firm, and one of the people cited above.
While spokespersons for Canada Pension Plan Investment Board (CPPIB), Abu Dhabi Investment Authority (ADIA), and Goldman Sachs declined to comment, a JERA Co. Inc. spokesperson said in an emailed response: “Regardless of whether the project is in India’s green energy sector or not, we consider that payment on schedule is one of the criteria for investment.”
“While we cannot comment on this specific matter, expansion of our renewable energy business worldwide is a key priority for ORIX, and the Indian market is one of the most important and promising,” an ORIX Corp. spokesperson said in an email.
Queries emailed to the spokespersons of union ministries of power and new and renewable energy, Telangana chief minister’ office and state’ energy secretary on late Monday night also wasn’t answered.
Queries emailed to the spokespersons of GIC, Actis, GIP, Acme Solar, ReNew Power, Greenko, and Rays Power Infra on late Monday night remained unanswered.
This comes at a time when India’s solar power tariffs have touched a record low of Rs1.99 per unit, with the rates expected to decline further. This has resulted in tariff shopping by DISCOMs. Also, already awarded clean energy capacity is stranded as fund-starved DISCOMs are unwilling to sign contracts for these previously awarded projects at a comparatively higher tariff.
Mint reported on 20 August about falling clean-power tariffs putting an already awarded 16.8 GW solar and wind energy capacity in limbo.
“Telangana has paid for renewable energy bills till the month of March 2020 as of March 2021, with outstanding bills to be paid for the last 11 months. These delays are impacting sentiments of foreign investors in any state project in the country where payment security is a big question,” said a senior executive from one of the above-mentioned firms requesting anonymity.
India has set a target of achieving a 450GW renewable energy capacity by 2030. It currently has an installed renewable energy capacity of 89.63GW, with around 49.59GW capacity under execution and another 27.41GW been tendered.