India's Energy Minister wants to punish states for stopping solar power procurement, but can he?

Recently, the news flow has not been good form the Indian solar sector with a couple of states like Rajasthan and Tamil Nadu reportedly not buying solar power from running plants and instead opting for much cheaper power from the energy exchanges. This has really rattled some of the major investors and developers of solar power in the Indian sector. The Indian energy minister Piyush Goel, who has successfully pushed the Indian solar energy sector and set up an ambitious 100 GW by 2022 target is getting alarmed. India has got around 8 GW installed and needs to install almost 17 GW every year to get to the target.

If developers do not put in the money because of the perceived risks in selling their power, then it will either raise the prices or see no bids. The Minister knows that he has to take action fast, or India’s red hot solar sector will turn cold very fast.

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But can he do anyting to prevent the Indian states and their bankrupt distribution utilities from buying the solar power. Power is a concurrent subject and both the state and central goverments have the power to regulate this sector. If a state government does not buy solar power, there is not much that the power minister at the centre can do. The proof is the dismal state of power sector in India where there is an artificial surplus of power. Even as people live in darkness, distribution utilities don’t buy and sell them power because they don’t have money. It is due to the stupid policies followed by their state governments. While Goyal can try to give some “carrots” so that the states follow the law that RE should have a “must run” status, there is not much he can do in terms of a “stick” since he has no powers in that respect.