New Delhi: Acciona SA, the Spanish renewable-energy developer in over 30 countries, said it’s holding up further work in some states in India because local electric utilities aren’t paying their bills on time.
The company with 86 megawatts of wind power in India and another 78MW under development is the latest investor to complain that some Indian power retailers are stifling investment and undermining Prime Minister Narendra Modi’s green-power ambitions.
The power distribution companies, called discoms, are months in arrears in some places and are seeking to limit the amount of renewable energy they buy because electricity from fossil-fuel generators is cheaper.
“If the discom risk wasn’t there, we could have easily built about 400 to 500 megawatts of additional wind projects,” Glen Reccani, managing director of Acciona’s Indian unit, said in an interview. “How do you fit that into your business model?”
The delays matter because they’re stalling India’s $200 billion plan to more than quadruple wind and solar capacity. Modi wants wind and solar power to supply 200 gigawatts of power by 2022, up from 45GW at present.
“These discoms are paying conventional generators but they haven’t paid wind from July 2015 onwards and are actively discriminating against wind generators,” said Sumant Sinha, founder of ReNew Power Ventures Pvt. Ltd.
Acciona said it’s shelved investment plans in Maharashtra, Madhya Pradesh and Tamil Nadu, which are at the crux of the delayed payments.
The director of Madhya Pradesh Power Management Company Ltd, Sanjay Kuman Shukla, said via telephone that “we have cleared all our dues til July” and that “remaining dues of a couple months cannot be compared” with delays in other states. Officials from discoms in Rajasthan, Maharashtra and Tamil Nadu didn’t return phone calls seeking comment.
According to India’s Wind Independent Power Producers Association, developers with almost 8GW of installed capacity in states are facing payment delays and lack power-purchase agreements.
“We have the financial wherewithal to keep the debt servicing current, but a lot of the smaller guys don’t and with this problem non performing assets are creeping in for some of the generators in Maharashtra,” Sinha said.
ReNew Power said 360MW of wind power in Maharashtra, 150MW in Rajasthan and 100MW in Madhya Pradesh are affected by payment delays, impacting 35% of the company’s revenue.
Cash-squeezed investors are being forced to use equity to pay off loans and then seek a bridge loan for new or pending projects, according to Sunil Jain, the president of the wind association.
“Bankers realize if you’re not getting paid for the old projects, how will you get paid for the new ones, and become reluctant to give loans,” Jain said in a phone interview.
Wind generators are turning to bridge loans to balance obligation with the delays, according to Ashok Haldia, who heads PTC India Financial Services Ltd.
“Interest rates on such loans are higher than the project loan normally by up to 2 percent, Haldia said in a phone interview. If the non-payment situation worsens, promoters who do not have deep pockets or haven’t planned working capital margin to cover such contingency, may be prone to default, he added. Bloomberg