In order to put the growth back on track in the renewable energy sector, the Indian government has turned to public sector companies.The Indian government’s Department of Public Enterprises and Economic Affairs has directed public sector companies to increase investment in renewable energy. The government-owned companies have been directed to either sign power purchase agreements to buy renewable energy or set up power projects on their own. They have also been advised to set up solar cell and module manufacturing units.This is not the first time that the Indian government has asked public sector companies to increase exposure to renewable energy. Leading companies like NTPC, Coal India, Airport Authority of India, NLC India, Indian Oil, Indian Railways and several others have taken several measures to set up utility-scale as well as small capacity solar and wind energy projects.

The Indian government has also launched a solar power capacity addition program specifically for public sector companies. Under this program, these companies shall compete for capital cost subsidies to set up to 12 gigawatts of solar power capacity. The initial auctions under this scheme have not received encouraging response from the companies.

This could be one of the reasons behind this fresh directive from the government. Another reason could be the overall pessimism in the renewable energy sector in the country. Uncertainty faced by project developers and delays in payments have taken a heavy toll on new capacity addition. Payments worth $1.4 billion are currently pending to numerous project developers which are now struggling to find funds to finance new projects.

The problems faced by project developers are mirrored in their limited participation in the recent solar and wind energy tenders as well as the growing list of companies looking to offload operational assets to raise funds.

Finally, the government could use all help it could get to reach the ambitious capacity target of 175 gigawatts by 2022. The recent slowdown in capacity addition, coupled with poor response to auctions, has raised doubts over the achievement of this target.