<p>Taking over stressed thermal plants, repurposing them and avoiding new thermal assets will help India to stay on path of energy transition goals, a study has said, warning that the changing energy finance regime may turn some of the under construction projects of 25.5 GW capacity into non performing assets (NPA).</p>.<p>In its study titled, 'Cleaning up the last pile of India's Power Sector NPAs', the Institute for Energy Economics and Financial Analysis (IEEFA) noted that power sector has long contributed to the country's NPA problem.</p>.<p>Quoting from the reports of the parliamentary standing committee, the study noted that a "vast majority of the NPAs come from thermal power projects, mostly privately owned" that had an outstanding debt of Rs 1.7 trillion.</p>.<p>The committee in August 2021 found that 11 partially commissioned projects of 13.3 GW capacity were waiting for resolution at the National Company Law Tribunal, six others (6.4 GW) in early stages of construction had come to a halt while 30 of the 34 projects had been delayed with a total cost over run of Rs 411 billion and total time over run of 148 years.</p>.<p>"IEEFA analysis shows that 26 of the 34 stressed thermal assets, having an installed capacity of 21.4 GW have been resolved partially or fully as of May 2023. Out of these, 11 were resolved through acquisition by a strategic buyer," the study said.</p>.<p>The study by Shantanu Srivastava of the IEEFA said though India has effective tools like the Insolvency and Bankruptcy Code, its success in resolving power sector assets was questionable as the sector's acquisition ratio has been much lower.</p>.<p>Noting that India's green energy targets will lead the next leg of financing, the headwinds faced by the renewable sector and the rising energy demand over the last year has led the government to relook at thermal power as a fix against power crunch in the short-term scenario. As a result, India has under-construction thermal plants with a capacity of 25.5 GW.<br />The study warned that such a push has the potential to derail India's energy transition journey and also diverts financing towards high carbon-emitting assets. "Globally gas-based power capacity is under consideration as a viable transition asset from coal to pure renewable energy as even though they are not renewable, they are cleaner than coal-based power," suggesting that 24X7 renewable energy by blending with clean gas could be a meaningful transition model.</p>.<p>The study laid out the strategy to acquire and repurpose the stressed thermal plants by giving case studies and suggesting potential acquisition targets. “It will give the banks more headroom to contribute towards achieving India’s ambitious clean energy goals,” Srivastava said.</p>
<p>Taking over stressed thermal plants, repurposing them and avoiding new thermal assets will help India to stay on path of energy transition goals, a study has said, warning that the changing energy finance regime may turn some of the under construction projects of 25.5 GW capacity into non performing assets (NPA).</p>.<p>In its study titled, 'Cleaning up the last pile of India's Power Sector NPAs', the Institute for Energy Economics and Financial Analysis (IEEFA) noted that power sector has long contributed to the country's NPA problem.</p>.<p>Quoting from the reports of the parliamentary standing committee, the study noted that a "vast majority of the NPAs come from thermal power projects, mostly privately owned" that had an outstanding debt of Rs 1.7 trillion.</p>.<p>The committee in August 2021 found that 11 partially commissioned projects of 13.3 GW capacity were waiting for resolution at the National Company Law Tribunal, six others (6.4 GW) in early stages of construction had come to a halt while 30 of the 34 projects had been delayed with a total cost over run of Rs 411 billion and total time over run of 148 years.</p>.<p>"IEEFA analysis shows that 26 of the 34 stressed thermal assets, having an installed capacity of 21.4 GW have been resolved partially or fully as of May 2023. Out of these, 11 were resolved through acquisition by a strategic buyer," the study said.</p>.<p>The study by Shantanu Srivastava of the IEEFA said though India has effective tools like the Insolvency and Bankruptcy Code, its success in resolving power sector assets was questionable as the sector's acquisition ratio has been much lower.</p>.<p>Noting that India's green energy targets will lead the next leg of financing, the headwinds faced by the renewable sector and the rising energy demand over the last year has led the government to relook at thermal power as a fix against power crunch in the short-term scenario. As a result, India has under-construction thermal plants with a capacity of 25.5 GW.<br />The study warned that such a push has the potential to derail India's energy transition journey and also diverts financing towards high carbon-emitting assets. "Globally gas-based power capacity is under consideration as a viable transition asset from coal to pure renewable energy as even though they are not renewable, they are cleaner than coal-based power," suggesting that 24X7 renewable energy by blending with clean gas could be a meaningful transition model.</p>.<p>The study laid out the strategy to acquire and repurpose the stressed thermal plants by giving case studies and suggesting potential acquisition targets. “It will give the banks more headroom to contribute towards achieving India’s ambitious clean energy goals,” Srivastava said.</p>