Green energy deals deferred amid 2nd wave

Failure to meet commissioning deadlines will result in hefty penalties for developers.mintPremium
Failure to meet commissioning deadlines will result in hefty penalties for developers.mint
 2 min read . Updated: 20 Apr 2021, 12:15 AM IST Utpal Bhaskar

Several sale processes have suffered, given the difficulties involved in arranging logistics amid travel curbs

With India facing a very severe covid-19 second wave, and states imposing lockdowns and travel restrictions, several green energy deals have been deferred, said two people aware of the development, seeking anonymity.

With due diligence necessitating travel to remote locations where the solar and wind farms are located, several sale processes have been delayed, given the difficulties involved in arranging logistics. There is also a growing clamour from a few countries to impose travel bans to India due to the spike in covid-19 cases. This assumes significance, given that there is a large global investor interest in India’s green economy.

TRENDING STORIESSee All

“There are many sales processes for which the mandate has been given. However, there is a rethink happening regarding the timing of starting them, given the associated problems with the pandemic that hinders travel and necessary due diligence exercise," said one of the two people cited above.

“We plan to start a sale process but are postponing it given that the investors or their advisors won’t be able to travel in the present circumstances to our sites that are located in remote locations," said the second person, overseeing the sale of large solar assets.

While there is a growing interest in India’s green economy, there are concerns over inability of projects meeting commissioning deadlines, which will result in hefty penalties for developers.

Considering the growing concerns in the wake of the pandemic, solar industry lobby group Solar Power Developers Association (SPDA) pitched for an additional three-month extension in project commissioning dates to the ministry of new and renewable energy. This is in addition to the five months extension already granted by the ministry. Power purchase agreements signed by developers specify strict commissioning deadlines and a failure to meet them can result in fines and encashment of their bank guarantees.

“The second wave of the covid-19 pandemic has been advancing swiftly, with a big spike registered across Maharashtra, Karnataka, Tamil Nadu, Madhya Pradesh, Uttar Pradesh, Punjab, Rajasthan, etc. To arrest the virus’s spread, various state governments and local administrations have announced vaccination drive and local restrictions affecting the movement of personnel, labour, and delay on multiple approvals from state authorities, etc," SPDA said in a statement on Saturday.

India is running the world’s largest clean energy programme to achieve 175 gigawatts of renewable capacity, including 100GW of solar power by 2022.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close