What Developers are saying
- Delays in state government projects are common. Land acquisitions are a big problem in states.
- Grid connection and evacuation is a big issue that needs to be fixed. Solar projects are completed on time but are waiting for grid connection for months without the benefit of deemed generation.
- PPAs are one sided – developers are facing the threat of losing performance guarantees, but DISCOMs are not penalized for delayed payments.
- In Tamil Nadu some solar projects are being asked to back down about 50 percent of generation without compensation. The state is opting for cheaper power from the exchanges instead of honoring solar PPAs it signed.
- Developers hope that a ‘Change in Law’ clause in PPAs will protect their interests from GST impact.
- NTPC and SECI tenders are usually delayed, which is a burden on developers that have to spend a lot of time working on submitting these tenders.
- Developers prefer NTPC projects over SECI projects as VGF is disbursed over five years and the process is complicated.
- Solar parks are getting better at not rushing the auctions until grid connectivity is ready. Parks are taking away the risk of land acquisition and evacuation but they are expensive.
- Three to six month delays are expected during commissioning due to grid connection issues in some areas. There are no significant curtailment issues outside of Tamil Nadu and Rajasthan.
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What Banks are saying
- Projects below Rs.5 (~$0.0746)/kWh are not reaching financial closure yet.
- Payment cycles are getting better; there are some rare cases with 45-60 day delays.
- Tamil Nadu’s DISCOM is unpredictable with payment delays and curtailment.
- Lenders are offering loans for 15 to 25 years for projects in solar parks.
- There are a lot of new developers entering the sector, but lenders are more comfortable with proven, experienced project developers.
- Developers should utilize buyers’ line of credit for the initial years of project.
- UDAY has not yet shown positive effects on DISCOM finances.
Priya currently serves as the Publisher for MercomIndia.com. With more than a decade of experience working in corporate communications, research, and policy, Priya has deep roots in the Indian energy markets and is regularly in touch with policy makers and industry leaders. Priya received her bachelor’s degree from Vidya Vardhaka College of Arts in Bangalore, India for Political Science and Economics and completed her MBA from Bangalore University. More articles from Priya Sanjay.