Renewable energy projects face up to 12-month delay in signing of PPAs

India’s renewable energy sector is facing significant delays in securing power purchase agreements (PPAs), which are affecting around 40-45 GW of projects out of a total 80-90 GW in the pipeline.

Experts note that distribution companies (discoms) are prioritizing projects with higher capacity utilization factors, contributing to the backlog in PPA signings. The gap between project awards and PPA finalizations currently spans eight to nine months, impacting project execution timelines.

Several factors, including regulatory uncertainties, financial challenges faced by discoms, and conflicts between central and state policies, are contributing to the delays. Grid infrastructure limitations and tariff disputes also complicate matters, with risks of cost overruns and reduced investor confidence.

Delays were notable in 2022 and 2023, with PPA signings consistently falling behind schedule. For instance, Renew’s 500 MW solar project in Gujarat and Adani Green’s 400 MW wind-solar hybrid project in Andhra Pradesh faced significant delays.

Experts suggest aligning discoms’ offtake schedules with the clearer timelines of public sector undertakings to streamline the PPA process and resolve the ongoing delays.