India wants power distribution companies to act faster on clean energy deals

India's power ministry has proposed a new rule that would require electricity distribution companies to take quicker action after signing deals to buy power from clean energy projects.

Under the draft rule dated June 25, distribution companies must ask for official approval from the appropriate regulatory commission within 30 days of signing the deal with an intermediary, such as a renewable energy implementing agency.

This is a significant step as the industry has flagged delays from power distribution companies, which has slowed down the start of solar, wind, and other renewable energy projects.

India is working towards its target of installing 500 gigawatts of clean energy capacity by 2030, nearly triple its current capacity.

The sector is grappling with several obstacles, including weak demand for tenders, land acquisition challenges, delays in power purchase agreements and project cancellations.

If the approval from a regulatory commission takes too long — more than 60 days after applying or 120 days after signing the deal — the company building the project will get extra time to complete the project without being penalized, the power ministry said in its proposal.

The ministry has asked for feedback on the proposal from stakeholders by July 9.