A regulatory overhaul of India’s grid has sparked fears in the solar power industry that they may suffer a negative impact on profitability. The overhaul includes a stipulation regarding penalties for solar generators if they fail to deliver the electricity that they have committed to supply to the grid, Reuters reported.
India’s electricity grid is expanding at a slower pace than the boom in solar energy installations, leading to an increased share of solar curtailments and threatening to slow the solar and wind boom in the world’s most populous country. In the first quarter of this year, curtailments due to grid and transmission line constraints reached 300 GWh, climate think tank Ember reported last month, adding this represented two-thirds of total curtailments in the three-month period.
However, the government in New Delhi has seen fit to make provisions for the security of electricity supply amid the surge in solar capacity, which affects grid reliability, as demonstrated in other countries with substantial solar generation, where curtailment has become the only way to avoid grid overload, essentially wasting electricity—and money.
According to India’s solar industry, the new regulations could reduce operators’ revenues by 11%, with the percentage much higher for wind operators, estimated at 48%. This would affect investor appetite for one of the world’s fastest-growing wind and solar markets, lobby groups warned. India has committed to having 500 GW of wind and solar generation capacity installed by 2030.
India expects to nearly quadruple its solar power capacity and triple wind power-generating assets within ten years, according to the new Generation Adequacy Plan published by the country’s Central Electricity Authority earlier this year. In 2025, the country boasted achieving five years ahead of schedule its target to have 50% of its installed electricity capacity coming from non-fossil fuel sources. With the new regulation, this pace of growth may well change considerably.
By Irina Slav for Oilprice.com
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