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Climate change

India’s solar and wind boom is fizzling

October 10, 2019
Solar panels on a farm in Karnataka.
Solar panels on a farm in Karnataka.James Temple

The world’s second most populous nation has been a shimmering bright spot for solar and wind growth, driven by government policies and ambitious targets. But new projects have stalled amid increasing regulatory uncertainty as states, their financially strained electricity distribution companies, and renewables developers squabble over contracts and payments.

The background: India had aimed to install 175 gigawatts of renewable generation by 2022, a central policy plank for the recently reelected Prime Minister Narendra Modi. But the Mumbai rating agency CRISIL now predicts the country is going to miss those goals. The S&P-owned firm expects India will only reach 104 gigawatts by 2022, coming up more than 40% short, it said in a recent report.

What’s happening? The report notes that the state of Andhra Pradesh simply stopped paying developers, despite long-term power purchase contracts, in a strong-arm effort to force developers to slash rates. Meanwhile, the state-owned distribution companies have pushed down prices for proposed projects to the point where they’re often not financially viable.

These and related actions have chilled investment, stalled projects, and discouraged developers from bidding for new ones. In the last fiscal year, more than a quarter of state or federal auctions for new projects “received no or lukewarm bids.”

The reaction: India’s Ministry of New & Renewable Energy blasted the report, saying it “lacks credibility in all respects as CRISIL did not even bother to consult this Ministry for its views.”

The bigger picture: India’s ability to clean up its electricity grid is a crucial piece of the global climate puzzle, as I reported in a lengthy piece earlier this year. The country is the world’s third biggest emitter of greenhouse gases. But crucially, it is also a test case for whether poor nations can grow their economies and bring more of their citizens online without triggering runaway climate emissions. The recent news is less than encouraging on that score.

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