Data dive: Dark clouds hover over India’s solar story

SECI was set up as an ‘implementing’ agency under the National Solar Mission. It signs agreements to purchase solar power from private developers (such as Adani). To sell that power, it signs back-to-back agreements with power distribution companies in states. There’s friction in this chain—and it’s hindering India’s efforts to quickly turn its power sector away from fossil fuels and towards renewables.

According to the US agency, SECI signed a deal to buy power from the Adani Group but found it difficult to get states to buy that power. This is where the Adani Group, which has denied the allegations, was supposed to have come in. The controversy also highlighted contradictions in the Indian solar sector. The installed capacity of solar power has soared from 2.6 gigawatts (GW) in 2014 to 92 GW in October 2024. Solar now accounts for 20% of all power capacity in India, from barely 1% a decade ago.

Also read | An Opec for solar energy is a bad idea: This Chinese idea is best dropped

But in terms of the actual energy generated and supplied to consumers through the grid, solar accounts for just 7% of the total energy supplied from all sources. Solar’s share of electricity generated from renewable sources (such as wind and biomass) has also seen big fluctuations over the past few years.

Widening gap

Of the 66 GW of solar power capacity installed as of March 2023, SECI-commissioned projects accounted for 12.6 GW. However, SECI has awarded nearly thrice that amount via tenders, and 35.7 GW is the capacity to be added. Over the years, there’s been a growing discrepancy between the capacity of solar projects that SECI has contracted and the actual capacity of solar power plants that have become operational and are selling electricity to distribution companies. In 2022-23, SECI did not award any new tenders.

Also read | 2024 in review: India’s race for sustainable survival as climate crisis deepens

This widening gap points to deeper problems in the solar sector. As a recent article on CarbonCopy pointed out, domestic costs of solar power modules have risen as India has set up tariffs to prevent a flood of cheap Chinese imports. As a result, solar project costs have risen. This has implications for the willingness of power distribution companies (discoms) to sign power purchase agreements with solar developers, or power sale agreements with institutions such as SECI.

Purchasing power

State discoms are required to commit to generating a certain minimum proportion of power through renewable sources. According to the latest targets by the ministry of power, a third of all power consumption in an area served by a discom should be covered by renewables other than hydro power or wind power by 2030 (this category covers solar). Targets for wind and hydro power are specified separately.

While the ministry of power sets targets, individual states also have their own targets, both for discoms as a whole and individual discoms. However, as of 2022, compliance of different states with such renewable purchase obligations (RPOs) was a mixed bag, showed data from Prayas, Energy Group, a non-profit in the energy sector. While Karnataka and Telangana are ahead in terms of compliance with targets, Maharashtra, Bihar and Punjab are behind.

Discoms bleeding

While the central government has prioritised the purchase of renewables over conventional energy, and incentivised them as such, renewables run into the oldest and biggest problem facing the Indian energy sector: the financial status of discoms, especially state-owned ones. The problem has worsened as many private discoms have taken away the most lucrative customers (large companies). Accumulated losses of discoms have ballooned from ₹4.3 trillion in 2017-18 to 6.5 trillion in 2022-23.

Also read: Can solar cells energise your investment portfolio?

Managing renewables like solar in the overall power grid is complex because they supply energy intermittently over the course of a day. To balance this unpredictability, discoms have to keep conventional sources of power on standby, and pay for them irrespective of usage. This increases costs at a time when most state discoms are strapped for cash. Solar will have to surmount all these challenges to translate higher capacity into increased supply.

www.howindialives.com is a database and search engine for public data.