India is coming up with a new green power tariff policy to boost renewable power generation and utilization. With the market opening up as the global economic situation improves, the renewable power industry is expected to see a massive upsurge of orders and investments. The proposed green power tariff will not only promote green power utilization but also benefit stakeholders like Adani, Siemens, ReNew Power, Tata, etc.
Green tariffs are instruments offered in regulated electricity markets by utilities that allow consumers to buy renewable electricity from green projects at special rates. The green tariff policy in question will allow power distribution companies (DISCOMs) to supply electricity generated from green power projects at cheaper rates compared to conventional power plants.
The policy is certainly a blessing for the renewable energy (RE) sector. Green projects will reap the windfall as DISCOMs purchase bundled renewable electricity to meet power demands. Energy requirement in the country is predicted to increase significantly as the economy finds its feet again. Renewable power players like Adani, Siemens, ReNew Power, etc., stand to gain immensely from such a policy as it will not only mean guaranteed returns but also attract further investment.
Green power has become the preferred form of investment as the world transitions to a cleaner form of fuel. Adani Green Energy Ltd. (AGEL), for example, is a major stakeholder in India’s RE sector. The company has demonstrated the profitability as well as the untapped potential of green energy in India. It had set itself a target of 25GW renewable capacity by 2025, which it achieved earlier this year – four years ahead of schedule! Currently possessing an operational capacity of 5.4GW, Adani is one of the top green energy companies, not only in India but on the global stage as well. Its latest acquisition of SB Energy and subsequent plans to raise $600 million through overseas bonds is a reflection of the company’s capability to transform the industry on a larger scale.
The proposed green tariff is lucrative not just for RE companies like Adani. Siemens is another player that stands to profit. Turbine manufacturers have had a torrid time due to pandemic as orders dried up and material costs skyrocketed. Faced with rising prices and lockdown restrictions, manufacturers have incurred considerable losses in the preceding quarters. However, the introduction of a green power tariff policy is a godsend for these manufacturers. The policy can kick start an influx of orders as green projects become the preferred route of investment for new investors.