Centre to wait on second blanket extension to renewable projects

Our Bureau New Delhi | Updated on May 14, 2021

Cites the absence of national lockdown; however, projects commissioned on or after April 1 can apply for claiming time-extension

The Ministry of New and Renewable Energy (MNRE) has said that renewable energy projects under development will be eligible for time extension in light of the second wave of Covid, but has refused to give a blanket extension in the absence of a national lockdown.

Instead, “renewable energy projects, being implemented through Implementing Agencies designated by the MNRE or under various schemes of the MNRE, having their scheduled commissioning date on or after 1 April 2021… can apply to the concerned implementing agency for claiming time-extension in project commissioning,” MNRE said in an order on Wednesday.

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During the first wave of Covid, the central government had given a blanket extension of five months to renewable projects, with a maximum permissible extension of six months.

“The new order is only mild comfort for the industry, which is struggling with additional costs and time delays in every aspect of project development including site preparation, engineering, financing, procurement and construction. Our conservative view is that the projects will need at least 3-4 months of additional time,” said Bridge To India MD Vinay Rustagi.

“Work at a majority of under-construction projects is halted right now and migrant workers have left for their homes,” said Amit Kumar, Partner, PwC. Most of the large-scale solar and wind projects are in rural areas, where local villagers last year had resisted the re-entry of migrant labourers to resume work due to fear of Covid, he added.

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Project costs, auctions

After the initial disruption caused by Covid, auction activity had picked up in the second half of financial year 2020-21. The total renewable capacity auctioned in the fiscal year was 21.2GW, over 80 per cent of it going towards grid-connected solar projects, according to a report released on Wednesday by Council on Energy, Environment and Water.

“Project costs of the auctioned capacity can rise by around 10-12 per cent due to the ongoing surge in commodity prices and second wave-related logistical costs,” said Ankur Agarwal, Associate Director at India Ratings and Research. Global prices of raw materials such as glass and copper have been undergoing a strong upcycle.

The rise in commodity prices along with the impending imposition of the basic customs duty is also expected to push tariffs from their record lows. “Tariffs are likely to rise by at least 20 per cent in auctions during financial year 2021-22,” Kumar said.

Published on May 14, 2021

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