India’s renewable energy growth stalled by delay in signing PSAs

Delays in signing power sale agreements (PSAs) are a bottleneck in the growth of India’s renewable energy capacity, jeopardising the Government’s target of 175 gigawatts (GW) by 2022, dampening investor confidence and threatening the viability of projects.

According to the Institute for Energy Economics and Financial Analysis (IEEFA) and JMK Research, PSAs for nearly 19GW of renewable energy capacity tendered by Solar Energy Corporation of India (SECI) are yet to be signed by state-owned distribution companies (discoms). Manufacturing-linked solar projects account for the majority (63%) of this capacity.

“This situation is having an adverse impact on the morale of project developers and investors and is slowing overall progress on renewable energy installation,” says co-author Vibhuti Garg, IEEFA Energy Economist, Lead India.

“The missing link of PSAs affects the entire value chain. For example, without the assurance of the offtake of power for auctioned renewable energy projects, it becomes virtually impossible for developers to secure debt financing.”