Solar developers in some Indian states fear curtailment might come back

They are getting reluctant to purchase solar power.

Developers told Mercom Capital Group that in Tamil Nadu and Rajasthan, they are wary that curtailment might come back to haunt the sector. The distribution companies (DISCOMs) can be reluctant to purchase solar power due to cost higher than conventional energy. 

Tamil Nadu has yet to join the Ujwal DISCOM Assurance Yojana (UDAY) program which aims at the financial turnaround of DISCOMs. Until then, developers will be concerned due to Tami Nadu Generation and Distribution Company's (TANGEDCO) history of payment delays.

"In Andhra Pradesh, transmission losses are its gravest issue and few DISCOMs are reluctant to buy solar beyond their RPO. In Punjab, DISCOMs do not want to buy expensive solar power to provide subsidized power to farmers. Transmission losses are also an issue in Punjab, furthering developer reluctance," Mercom Capital Group said.

Here's more from Mercom Capital Group:

Telangana is mired with transmission and grid-connectivity problems. The state has a huge project pipeline, but, developers are concerned about power evacuation once all projects are commissioned. The state also suffers from land availability and grid-connectivity issues.

Madhya Pradesh also suffers from transmission and grid issues. Developers in the state have faced curtailment in some cases. The state has also witnessed payment delays.

Developers were disheartened by the slow progress of solar parks in Karnataka. The DISCOMs in Karnataka are in bad financial shape and some are reluctant to sign PPAs and buy renewable power due to higher power purchase costs.

In Maharshtra, developers have witnessed the shut-down of conventional thermal projects making them skeptical about investing in large-scale grid-connected projects in the state.

Uttar Pradesh faces grid-connectivity issues, transmission problems, aggregate transmission and commercial (AT&C) losses as the infrastructure is outdated and non-existent in some areas. Even solar parks in the state are lacking grid infrastructure, according to developers. Developers face problems in land-acquisition in solar park in Uttar Pradesh.

Solar projects are capital intensive and “a lack of financing infrastructure in the country is impeding desired growth in the sector,” said a developer. The developers want the Ministry of New and Renewable Energy (MNRE) to be more involved when issues between developers and state nodal agencies come up.