India is planning a crackdown on developers of power projects who miss the scheduled commercial date of operation or project completion deadline, said RK Singh, the Union Minister of Power and New & Renewable Energy, on Thursday.
According to him, electricity generation capacity addition is a big challenge and many developers are reportedly delaying projects that they won under the bidding process. Nearly 50,000 MW of under construction projects – for capacity addition – have been held back by bidders.
According to the initial plans, if developers miss the scheduled commercial date of operation or deadline to complete the project (SCOD) — which was won under a bidding process — then they are to be banned from participating in project bidding for one year.
For a repeat of the same offence, a second time failure, the developer will be banned for five years, said Singh.
“We [plan] to put this [rule] in [policy]. Failing in SCOD will not be healthy, until and unless you have good reasons. So, if you bid, bid with foresight and [due] deliberations,” he said while speaking at the annual session of the CII.
Power project developers are waiting for demand to grow but this will not happen, he said. Discom losses are down from 22 per cent to 17 per cent last fiscal and will come down to “less than 15 per cent, next year”, said Singh, adding that legacy dues of the sector are down 50 per cent and will be “wiped out in the next 8-9 months or so”.
Taking a dig at the freebies announced by some politicians, he said a system of penalties — where power will be cut off the moment dues pile up. “There is no problem in investing now in the power sector and people have started investing in it,” said the Minister, adding that “demand is burgeoning”.
India’s per capita emissions are among the lowest in the world, and 40 per cent of India’s power capacities are coming from non-fossil fuel sources. The target is to get 45 per cent of capacities from non-fossil fuel sources by 2030.
“We have over 52,000 MW of thermal capacity is under construction,” he said, adding that until battery energy storage becomes viable, India would have to add thermal power capacity to meet the demand. At present, the battery storage is ₹10 per unit (per kilo watt hr) and the energy rate is ₹2.30. “We have to come up with more viability gap funding,” he said. And if storage becomes viable by then, nearly 65 per cent of capacities would come from non-fossil fuel sources by 2030.
Plans are afoot to come up with a second PLI for another production-linked incentive scheme for grid-scale battery energy storage.