One bankrupt industry leaves $80 bln hole in India's climate pledge

 Without reforming discoms, India will struggle to meet its bold target of raising non-fossil-fuel generation capacity.

When it comes to saving the planet, the ambition of India’s reach is praiseworthy. The challenge lies in the weakness of its grasp.

After emphasizing for years that a pathway to going green was more important than a deadline, India surprised delegates at the COP26 climate summit in Glasgow by announcing a net-zero goal for emissions by 2070. More onerous than that longer-term commitment is the intention to use non-fossil-fuel sources for half of its energy needs by 2030.

It’s a daunting target. The share of renewables in the country’s current energy mix is only 12%. Besides, the third-largest emitter would guzzle 2.5 trillion kilowatt-hours of electricity annually by 2030, almost double what is required at the start of the decade.

Still, the world’s lowest-cost solar and second-lowest-cost wind producer can deliver on its pledge, provided a 6 trillion rupees ($80 billion) hole in the heart of the country’s power system can be filled.

That’s the quantum of accumulated financial liabilities at India’s electricity distribution companies, or discoms. This large overhang crimps their ability to pay on time, forcing them to run up operational debt to electricity suppliers and transmission firms. According to the most recent government data, discoms’ payment arrears are now nearly $14 billion, almost a fifth of which are claims of renewable power producers.