In a significant move for India's renewable energy sector, the government is considering rebidding up to 40 gigawatts (GW) of renewable energy capacity. This decision comes in response to lower-than-expected power demand, which has left many solar and wind projects stranded without power purchase agreements (PPAs).

Factors Driving the Rebid

The unexpected drop in power demand has been attributed to prolonged rainfall across the country. This weather pattern has not only reduced overall electricity consumption but has also led to the curtailment of solar power output to maintain grid stability during periods of low demand.

Shift in Bidding Strategy

The Ministry of New and Renewable Energy has announced a strategic shift in its approach to future bids. Instead of traditional solar or wind projects, the focus will now be on:

• Firm and Dispatchable Renewable Energy (FDRE) projects
• Renewable Round-the-Clock (RRTC) projects

This change aims to address the intermittency issues associated with solar and wind power, ensuring a more stable and reliable renewable energy supply.

Current Tariff Rates

The existing tariff rates for renewable energy projects in India are as follows:

Government Initiatives

To support renewable energy developers affected by production curtailments, the government has committed to providing compensation. This move aims to mitigate the financial impact on developers due to lower consumption.

Virtual Power Purchase Agreements

The Central Electricity Regulatory Commission is in the process of finalizing guidelines for virtual Power Purchase Agreements (PPAs). These virtual PPAs are designed to:

• Unlock financing for the 40 GW of stranded projects
• Allow corporate buyers to financially support renewable projects without physical electricity delivery
• Provide renewable energy certificates to buyers instead of direct power

This innovative framework is expected to play a crucial role in accelerating India's ambitious target of achieving 500 GW of renewable energy capacity by 2030.

Implications for India's Renewable Energy Goals

The rebidding of 40 GW of renewable energy capacity and the introduction of virtual PPAs represent significant steps in India's efforts to adapt its renewable energy strategy to changing market conditions. These measures are likely to:

1. Improve the financial viability of renewable energy projects
2. Attract more corporate investment in the sector
3. Enhance grid stability through FDRE and RRTC projects
4. Accelerate progress towards India's 2030 renewable energy target

As India navigates the challenges of aligning renewable energy growth with power demand, these policy adjustments demonstrate the government's commitment to maintaining momentum in the transition to clean energy sources.

The renewable energy sector in India is witnessing a surge in investor interest, particularly in distressed assets, with auction prices significantly exceeding reserve amounts. This trend underscores the growing confidence in the long-term potential of green energy investments.

Impressive Auction Results

Recent auctions of distressed renewable energy assets have yielded remarkable results:

• Regen Powertech, a wind turbine manufacturer, was sold for ₹240.00 crore, nearly doubling its opening bid of ₹125.00 crore.
• Wind World (India)'s debt, which was acquired by National Asset Reconstruction Company Ltd (NARCL) for ₹670.00 crore 18 months ago, has now received bids exceeding ₹1,250.00 crore.
• Edelweiss managed to sell 10% of Wind World's debt for ₹143.00 crore, four times above the reserve price of ₹35.00 crore.
• State Bank of India (SBI) recovered close to 40% on outstanding loans through a Swiss auction.

NARCL's Strategic Move

NARCL has invited expressions of interest to sell ₹3,763.00 crore worth of debt under the Swiss Challenge method. Omkara Asset Reconstruction Company (ARC) has been positioned as the anchor bidder at ₹1,250.00 crore, setting a competitive baseline for the auction.

Sector Growth and Future Prospects

The renewable energy sector in India is experiencing robust growth:

• The sector added 28.70 GW of capacity, a 55% increase from the 18.50 GW added previously.
• India has set ambitious targets of achieving 500 GW of non-fossil fuel capacity by 2030 and net zero emissions by 2070.

Improving Financial Health

The power sector, which includes renewable energy, has shown signs of financial improvement:

• Net Non-Performing Assets (NPAs) in the power sector have declined to 1.30% in 2022.
• This improvement comes after previous struggles with project delays and cost overruns.

Investor Confidence

The strong investor interest in distressed renewable energy assets reflects growing confidence in the sector's potential. Factors contributing to this trend may include:

• Government support and favorable policies for renewable energy
• Increasing global focus on sustainable investments
• Technological advancements reducing the cost of renewable energy production

As India continues its push towards clean energy, the renewable sector is likely to remain an attractive proposition for investors looking for long-term growth opportunities in the green economy.