In New Innings, MNRE Minister Alive To Payments Issue For RE Producers

The statement by the Power and New and renewable energy minister R K Singh that the government is building a payment security mechanism to protect developers from delays on generation payments is to be welcomed, as it shows a rightful recognition of a key issue plaguing the sector.  A pricing squeeze of the sort the industry has experienced in recent months might be the fair thing by consumers, but absolutely unfair to producers, if the payments are not made on time. An issue that has been highlighted in interactions with developers time and again.

This, along with the focus on financing access for the sector, demonstrates the minister’s awareness of cash flows for the sector, a key bottleneck in the recent cooling off of interest.

As of now, with SECI as the main power ‘purchaser’, it appears like the mechanism will be run through it only. As of now, it appears SECI does put up its hands when discoms take too long to pay up.

“Even if there is a disruption somewhere, we will ensure the payments will be made. For ensuring that the payments will happen on time we are coming up with some policy changes,” the minister said in a press briefing today.

Of course, SECI is not the only one bearing the pressure to pay up due to discom lethargy. NTPC has regularly been in the news for the delays it suffers, on both thermal and solar powered supplies.

Shri Singh has also said that the government is confident of achieving the 175 Gw target for green energy capacity by 2022. Though with a worrying proviso.  “We are not rigid about the energy mix. We will evaluate the energy source which is most suitable for a particular state. We are building that flexibility in each renewable energy source, the solar target can become 110 from initially planned 100 MW, wind can become from 60 to 70 or maybe 50 Mw,” he said.  Coming soon after the inclusion of large hydro projects in the overall renewable target of 225 GW, this further loosening of targets specifically from solar and wind is worrying. Small hydro and biomass projects, some of which have performed questionably in recent years, could be set for a push again, despite the better performance of wind and solar. These could be a function of political realities as well as construction lobbies.

The KUSUM scheme for farmers was also in the spotlight in the minister’s address. It remains a pet project of the ministry, despite the initial hiccups in pilots, with very high expectations of providing surplus income for farmers (up to Rs 30 paise per unit that is generated), while also cutting down on the agricultural power subsidies.