India’s New Plans for Mega Renewable Energy Plants are Mega Mistakes in the Making

The Indian government once again has put new plans for developing mega renewable energy at the forefront. As per the new plan, 1600 MW sized plants will be set up in states where land has been identified and cleared by the various authorities. The government has roped in Indian power-related companies owned by it such as NTPC, NHPC who will jointly work with state governments in preparing the projects. The template that will be used is the same that was used last decade in which the government would provide all land and transmission infrastructure along with the necessary approvals and developers would be invited to bid.

This is expected to considerably smoothen the process as land and evacuation are always cited as the biggest hurdles in developing renewable energy capacity in India. NTPC has also last week announced that it would build a giant 5000 MW solar energy plant in the Kutch region of Gujarat. In 2015, there was a lot of flurry of building four new 5000 MW mega solar plants in Ladakh, Rajasthan, and Gujarat but nothing came out of it. The government is still pursuing the Ladakh plants and has come out with a tender as well. Also, read about Solar Parks in India.

The Indian government generally fails to learn from its mistake. Huge infrastructure projects come with their own unique set of problems. Risk is highly concentrated and leads to huge cost and time delays without realizing the benefits of scale. The huge UMPPs built using coal are still causing problems to the government today with the private owners of these plants, Adani and Tata, suffering from the losses caused by it. Infrastructure is a high-risk sector with numerous risks. These get compounded in huge projects leading to losses in the hundreds of millions of dollars and ultimately puts taxpayer money at risk as these have to be bailed out given that infra projects have a large social benefit angle.

In India, the problem gets further compounded as private developers bid irrationally most times ultimately hoping that the government will bail them out and also pass on the risk to government-owned banks which lend debt to these projects. In renewable energy, DER projects are becoming extremely viable as they lead to lower T&D losses, spread wealth creation amongst consumers and are less risky. Ultra mega projects may make sense in fossil fuels as you can’t build a 100 kW coal power plant but it is extremely feasible to develop a 10 kW rooftop solar project on your house. Also with the costs coming down, it is possible to generate solar energy at INR 4-5/ kWh from these small plants. Why do you then need to build these giants projects which will also need massive transmission infrastructure to move the power from these parks to consumers?