Mr GB Pradhan secretary ministry of new and renewable energy said that companies that have put up projects to produce renewable energy, particularly the solar power developers, will fold up if they are not paid in time.
Speaking at Renergy 2012, a conference cum exhibition organised here by the Tamil Nadu Energy Development Agency, Mr Pradhan said even if a few renewable energy companies fold up, the confidence in industry will be seriously impaired.
He drew a parallel to the loss of confidence in the power sector in the 1990s (when many foreign companies, such as Enron, came into the sector with great hopes, but the projects fizzled out mainly because of the lack of confidence in their getting their payments from the State electricity boards.)
He said that "The renewable energy sector works on a tight budget." Mr Pradhan's comments are significant against the backdrop of payment defaults by two key states Tamil Nadu and Rajasthan. Tamil Nadu accounts for about 40% of the wind power capacity in the country, while Rajasthan is growing big in solar.
In Tamil Nadu, dues to wind power companies have been pending for over 9 months. In Rajasthan, the situation is not so grim, but payments are getting delayed.
Mr Pradhan also called upon the financial sector to look at funding renewable power projects separately, and not combine the renewable power producers with the producers of power from conventional sources. He said that "It is our failure that we have not been able to convince our brethren from the financing industry to look at this sector as separate from the rest of the power sector."
Mr Pradhan said the Government of India was happy with the progress under the National Solar Mission. He said that "We are on track to achieving the targets for Phase-I of the Mission." In Phase I, the Government intends to make happen the creation of 1,000 MW of solar capacity.