NEW DELHI: Renegotiation of power purchase agreements (PPAs) by states will deliver a severe blow to investments in renewable energy, one of the few sectors which has attracted investors, but courts would certainly rule in favour of affected companies if they challenge the move, ReNew Power CEO Sumant Sinha has said.
“It’s going to cause lasting damage, to the overall renewable energy investment environment, and not just to renewable energy but also to overall investments in India,” Sinha told ET. Sinha added that the states are failing to realise the overall impact of their current bid to renegotiate PPAs in the face of falling tariffs.
“And people unfortunately at the state level…it’s not their responsibility to think about these things because they are concerned about optimising their own state-level activities. So they are not thinking that much about what all of this does to the overall national investment environment,” he said. The fact that the states refuse to honour PPAs, calls for some amount of caution in the renewable energy sector in the country, Sinha said.
“Renewables is one of the very few sectors in India where investments were coming in… and now all of this uncertainty that is being created, it is going to lead to a lot of negativity and even when the government wants to revive its investments in renewables, people are going to be a lot more cautious now, about investing in the sector,” he said.
While the PPAs under threat are close to about 1,100-1,200 MW capacity, states will not have a legal backing if they want to rework PPAs, and that the courts would rule in favour of producers, Sinha said. “I’m totally confident that if I go to the courts eventually, the courts will rule in our favour. So I’m not worried about it. The only thing is, it’s causing all this needless noise in the system.”
With the government’s plan to generate 175 GW of its electricity through renewable energy, ReNew plans to consistently target 8% to10% of the new capacity added every year in the country. This year, the company will manage about 8% capacity of solar while wind still remains a question as there has been hardly any capacity addition this year, after a record 5,400 MW of wind capacity was added in 2016-17.
Source: economictimes.indiatimes
