Plan to fix poor financial health of India’s discoms ‘critical’ for solar

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on reddit
Reddit
Share on email
Email

India’s power ministry is working on a plan to alleviate the poor financial health of the country’s ailing distribution companies (discoms) in a move that could be critical for the solar power sector, according to an industry analyst.

Energy minister Piyush Goyal said a proposal attempting to provide permanent solutions to the debt-ridden discoms will be presented to India’s Union Cabinet “very soon”.

The package would help deal with INR4 trillion (US$61 billion) of discoms’ bad loans, with the intention of bringing down discoms' liabilities.

Poor financial health of discoms is consistently cited by industry commentators as a major barrier for the solar industry in India. It means they are less willing to take on electricity produced by solar power projects.

Jasmeet Khurana, senior consulting manager at analyst firm Bridge to India, told PV Tech: “Improvement in the financial health of state level power distribution companies is critical if India’s solar mission has to succeed.”

Khurana said previous bailout packages have not delivered the desired results and there needs to be more accountability fixed on states for reforms and performance.

For example, the UPA government had previously finalised a financial restructuring plan (FRP) for the discoms, but this was unsuccessful.

However, referring to the latest plans, Khurana said: “Except from some concerns from the lenders, we have mostly heard the right kind of noises about the current bailout package. We are waiting to see the final contours of this proposal.

“The first priority should be to reduce leakages and inefficiencies in power distribution at the state level. Beyond that, states will also need to raise power tariffs for consumers.”

Discoms have been hit by subsidised tariffs and are incurring annual losses of INR600 billion, which has a knock on effect for public sector banks as the bad loans rise.

Goyal, who will enter meetings with bankers and states including Tamil Nadu and Uttar Pradesh to discuss the debt issues, said: “The discussion with all major states facing problems are almost complete. I will meet Madhya Pradesh Chief Minister tomorrow in this regard”. 

Referring to the readiness of the banks to be hit by lower interest rates for the discoms, Goyal added: “I can assure you that every bank has hailed the innovative way in which a permanent resolution to the discom problems has been worked out. Banks are delighted at the entire proposal.”

Khurana added: “Resolution of Discom issues is critical not just for the solar sector but for the power sector and, thereby, the economy of India.”

9 December 2021
The Smart Energy Council is hosting Australia’s second Virtual Smart Energy Conference and Exhibition on Thursday, 9 December 2021. This event will show that the industry powers on despite COVID-19 and we are standing together undeterred in spirit. Bringing our global community together using the latest technology.
13 January 2022
Intersolar North America and Energy Storage North America “Come Together” for the first time in Long Beach, CA—connecting installers, developers, utilities, technology providers, policy makers, and key stakeholders from around the world to advance the clean energy future. With best-in-class conference programming, integrated exhibits and pavilions, and the live Solar Games installer competition, #isnaesna21 will showcase the industry trends, innovative solutions, and emerging talent transforming the solar, energy storage, and e-mobility markets. Register today to redeem our exclusive offer for PV Tech readers—free expo hall or 20% off full conference pass.
1 February 2022
As Solar Finance & Investment enters its ninth year, we sit on the cusp of a new power market with solar at its heart. The 2022 edition of the event will build on our years of expertise and relationships to bring investors and lenders together with top developers. Connect with leaders in the field and use exclusive insights to drive investment and development decisions for the future. Meet new and existing project partners at the largest gathering of European solar investors and lenders.
23 February 2022
Held annually since 2016, the Energy Storage Summit Europe is the place to be for senior stakeholders in the European storage industry. Designed to accelerate deployment of storage, we examine evolving chemistries, business models, project design, revenue stacks and use cases for storage. The 2022 edition will include exclusive content around longer duration solutions, energy strategies for wide-scale deployment of EVs and "EnTech", the event which sits at the intersection of digitisation, decentralisation and decarbonation of the power system. Come to meet TSOs, DSOs, Utilities, Developers, Investors and Lenders and leave with new contacts, partners and a wealth of information.
7 March 2022
Take your chance to join the most powerful platform in the MENA region. Middle East Energy (MEE), Intersolar, and ees, the leading energy exhibitions are joining hands to co-deliver an outstanding renewables and energy storage event at Middle East Energy 2021. Renewables and energy storage at MEE is the largest gathering of solar and renewable energy industry professionals in the Middle East & Africa, offering the most effective trade focused platform to international manufacturers and distributors looking to meet regional buyers.
23 March 2022
When it comes to storage, the US market exceeded a gigawatt of advanced energy storage installations (weighted towards lithium ion) at 1.46 GW, more than the previous six years in total! An exponential growth rate could see the market hit 7.5 GW p.a. by 2025. The summit will provide a wealth of content around this vital piece in the US power puzzle, with sessions dedicated to explore how companies are making money from batteries, the latest chemistries and their applications as they apply to different use-cases. We ask how investors can match ESG criteria to batteries and we will bring case studies of successful deployment and project execution onto the stage to examine how you can ensure your own projects are successful.

Read Next

PV Tech Premium
December 6, 2021
PV Tech Premium breaks down the key schemes and incentives that exist for companies that want to invest in India's growing solar market
December 6, 2021
Solar deployment in India is faltering as high module prices impact project construction, according to new analysis from Bridge to India.
December 6, 2021
The new edition of PV Tech Power, volume 29, is now available to download, including our comprehensive cover story on solar’s critical next decade.
Sponsored
December 6, 2021
UK-based solar PV inspection and data analytics company Above details how its ‘Follow PV’ project, launched alongside the University of Essex, is enhancing the research and development of autonomous drone technology in utility-scale solar.
December 6, 2021
Daqo New Energy has begun pilot production at its new 35,000MT Phase 4B polysilicon production facility, which has been completed ahead of schedule.
December 6, 2021
China’s National Energy Administration has kickstarted the second batch of large-scale wind and solar PV projects under the country’s multi-hundred-gigawatt desert renewables scheme.

Subscribe to Newsletter

Upcoming Events

Solar Media Events
February 1, 2022
London, UK
Solar Media Events
February 23, 2022
London, UK
Solar Media Events
March 23, 2022
Austin, Texas, USA
Solar Media Events
March 29, 2022
Lisbon, Portugal