India’s Green-Energy Providers May Struggle After Power Blackout

August 10, 2012 by  
Filed under Green Energy News

If there’s any country where solar
power should be an easy sell, it’s India.

Two-thirds of the country’s power supply comes from fossil
fuels, and power producers can’t get enough coal to fire their
plants or enough pipeline space to distribute natural gas,
Bloomberg Businessweek reports in its Aug. 13 edition.

In late July, blackouts over two days left much of northern
India in the dark, at one point cutting power to more than
640 million people. Even at the best of times the network fails
to serve much of India.

The July blackouts lasted “only for a couple of days, but
400 million Indians have never had electricity,” says H. Harish Hande, managing director of Selco Solar, a Bangalore-based
company that focuses on expanding solar power use among the
rural poor.

India gets only about 1 gigawatt of power from solar,
0.5 percent of its power consumption. Hande says solar may end
up taking a back seat as the government tries to reassure
business leaders and investors that it quickly will solve the
country’s chronic power woes.

“I am a little scared this is not going to be looked at as
an opportunity,” he says. The crisis “is going to be used as a
pretext to push for coal and nuclear.”

Solar Capacity

India’s government has made some progress. This year, solar
capacity has jumped almost fourfold from just 270 megawatts at
the end of 2011. In the five years that ended in March, India
added 14.3 gigawatts of renewable capacity, exceeding its
planned target.

Investment in clean energy grew 62 percent in 2011 to
$12.2 billion. To encourage state utilities to buy more green
power, the government has set up a system for companies to trade
renewable-energy credits.

Investors in green power have to contend with a weak
currency, which makes it hard to import needed equipment. In
March, the government let expire incentives that allowed
accelerated depreciation of wind-power turbines. That change
could lead to a 20 percent drop in installations this year,
according to Bloomberg New Energy Finance.

Solar and wind producers usually have no choice but to sell
their power to state-owned distribution companies, but many of
these have their own financial difficulties, suffering from
combined losses of about $15 billion, says Ashish Sethia, head
of India research for Bloomberg New Energy Finance. That makes
financing projects difficult.

“If I am a wind-power generator setting up a 200 megawatt
project and I want to sell to a counter-party that is almost
bankrupt, banks will struggle to fund that project,” he says.

To contact the reporter on this story:
Bruce Einhorn in Hong Kong at
beinhorn1@bloomberg.net

To contact the editor responsible for this story:
Chris Power at cpower3@bloomberg.net

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