Amidst a one percent decline in overall power demand across India, there are reports of a massive 20 percent decline in monthly generation of renewable energy, the biggest over the past three years, and in spite of a notable expansion in capacity.
A report published in the Hindu Businessline quoted Kotak Institutional Equities research paper to suggest that the one percent decline in overall power demand came despite an equal amount of growth in the northern India. The decline was sharpest in Western India of three percent. In the southern states, Tamil Nadu and Andhra Pradesh saw demand decline while in Karnataka it grew by a whopping 14 percent.
At the same time, The Mint reported quoting data from SBICAP Securities that wind power generation fell in August despite an overall increase in capacity. The drop has created some cause for worry and experts have been at pains to explain it away.
What Went Wrong?
The Mint quotes a report from India Ratings and Research to suggest that wind energy generation declined by 27 percent in August, which given the high share of installed wind power in the overall renewable energy resources, could be a cause for concern.
The report quotes experts to suggest that apart from the change in weather conditions and wind speeds, the fall has been caused by stunted offtake from several states, especially in the southern parts of the country. These states—Andhra Pradesh, Karnataka and Tamil Nadu—have a high share of installed renewable energy capacity compared with the rest of the country.
States generally realign their purchases due to the softness in demand during the monsoon, often leading to reduction in utilization levels of thermal power plants. Thermal power generation dropped 3.5% in August.
The impact is more pronounced in the renewable power segment. “They are not able to do proper integration of renewables,” says a renewable energy developer referring to curtailment in power offtake by certain states.
Experts believe that the generation should improve as the slump period of June-August that coincides with monsoons is over now. However, with the rains reviving in several parts of the east and some areas in the south, the worst may not yet be over.
What Does the Slump Signify?
Industry experts also believe that the renewable energy segment is also bearing the bruises of economic slowdown. Payment delays and threat of tariff renegotiations have led to downgrades in credit ratings, and pushed up finance costs, hurting returns and competitiveness of the renewable energy sector.
What this situation calls for is better planning at the state level. If India wants to achieve its ambitious target of 175,000 megawatts of installed renewable energy capacity by 2022, it certainly needs stringent planning and implementation.
Meanwhile, energy secretary Dr N Srikanth said in a statement earlier this week that power shortage in some states wasn’t due to non-purchase of solar and wind power but due to their inability to operate at optimum capacity due to inclement weather. He clarified that the government hadn’t stopped procurement from renewable energy producers.
A report published in the Times of India quoted the energy secretary to suggest that higher generation from coal-fired power plants and made up for the shortfall from renewable sources.