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Shares of renewable energy companies including Suzlon Energy and Inox Wind gained more than 5% on Monday after India's power regulator gave delayed clean-energy projects some breathing room.
What exactly happened: renewable energy projects need access to India's electricity grid so that the power they generate can be transported and sold.
The problem is that several renewable projects have been delayed because the transmission infrastructure needed to connect them hasn't been ready.
Instead of immediately losing their grid access for missing deadlines, developers can pay a daily fee and get additional time.
Companies can get up to:
- 3 extra months to complete land-related requirements
- 6 extra months to arrange financing
- 12 extra months to get the project operational
But that extra time isn't free.
For delays related to land and financing, developers will have to pay ₹1,000 per MW per day.
If the project is delayed in actually starting commercial operations, the fee rises to ₹3,000 per MW per day.
So, for example, a 100 MW project delayed at the commissioning stage would pay ₹3 lakh for every additional day.
Zoom out: India wants to expand its non-fossil fuel power capacity from around 300 GW to roughly 500 GW.
Getting there means building a lot more renewable projects, but also ensuring that delayed projects don't permanently occupy precious grid capacity.
