Issues such as disruptions during land acquisition and the slow pace of transmission capacity expansion are impacting the commissioning of solar power projects, with delays averaging around 17 months.
Ember’s latest report on risks associated with renewable energy expansion (RE) in India said that various factors have delayed utility-scale RE projects in India.
“Project-level data from the Central Electricity Authority (CEA) shows an average delay of 17 months (P50), with delays extending to 26 months in extreme cases (P90). In some instances, delays have reached up to 34 months, with some projects eventually being scrapped,” it said.
These delays are measured from the scheduled commercial operation date (SCOD) as specified in tender documents—typically 18 to 24 months from the date of execution of the power purchase agreements (PPAs).
Risk premiums
The Ember report evaluates risk premiums for solar power projects based on two benchmarks. P50, or the average scenario, is the most likely outcome, with a 50 per cent probability that actual results will meet or exceed this level. It is considered a balanced estimate of expected returns.
Second is P90, or the conservative scenario, which represents an outcome with a 90 per cent probability that actual results will meet or exceed this level. P90 is favoured by very risk-averse investors, as it ensures preparedness for unfavourable outcomes.
Ember explained that using P50 and P90 estimates reflects an investor’s risk tolerance. For instance, if historical data shows that the capacity utilisation factor (CUF) for a solar project ranges between 18 per cent and 22 per cent, a risk-averse investor might assume a CUF of 18 per cent, while a less risk-averse investor may use a more balanced estimate of 20 per cent.
The report pointed out that project delays typically arise from land acquisition for the plant, connectivity to the grid, and finalising PPAs.
Delay factors
Ember said that the land acquisition process, which is typically expected to take 6-9 months, can extend to 18-24 months in certain states, posing significant risks to maintaining SCOD timelines.
With project commissioning deadlines usually set at 18-24 months post the execution of the PPA, this process of acquiring land can be a major bottleneck, it added.
Issues such as administrative hurdles, non-digitised land records, fragmented local regulations, and a lack of centralised land policies complicate project development and delay financial closure.
Besides, the process for obtaining General Network Access (GNA) or connecting to the interstate transmission system (ISTS), as estimated from typical timelines, requires 4.5-13.5 months, depending on whether network expansion or augmentation is required.
However, connection timelines remain uncertain due to challenges in expanding transmission and evacuation infrastructure, it added.
“Building transmission lines can typically take 24 to 36 months, with delays caused by right-of-way issues, natural barriers like rivers and hills, ecological constraints—most importantly the issue of Great Indian Bustard (GIB)—and complex crossings involving highways and railways. In regions like Rajasthan, where GIB-related permitting bottlenecks are prevalent, construction timelines can extend up to 48 months,” the report pointed out.
A significant amount of High-Voltage Direct Current (HVDC) transmission capacity has been planned and auctioned to facilitate the transfer of RE from these States.
“But HVDC projects take longer to commission due to its reliance on very specialised equipment, such as converter stations and thyristor valves, unlike HVAC systems that have much simpler equipment requirements,” Ember said.
The granted grid connectivity for solar, wind and hybrid projects currently totals around 147 GW. However, this capacity is not available immediately and is expected to become operational over the next 3-5 years.