New renewable projects at border may see tariffs rise

Upcoming solar and wind energy projects along the border with Pakistan may demand more for their power as they pay higher insurance premiums to protect against risks from war, three industry executives said.

- Rituraj Baruah

Upcoming solar and wind energy projects along the border with Pakistan may demand more for their power as they pay higher insurance premiums to protect against risks from war, three industry executives said. This follows the recent military conflict between India and Pakistan where areas along the border suffered aerial attacks. Some of India's largest solar and wind power projects are located in Gujarat's Kutch district and Rajasthan's Bikaner, Barmer and Jaisalmer districts.

Rajasthan and Gujarat receive the highest solar radiation in India, ideal for solar projects. The two states have a combined solar and wind capacity of about 43 GW, with more in the pipeline.

The war component in insurance premium has jumped as much as threefold since the conflict, said Narayan Kumar, chief executive officer (CEO) of Kshema Power & Infrastructure Co. Pvt. Ltd, a green engineering, procurement, and construction (EPC) services provider. This, he said, will add 10-12% to the insurance cost.

"Apart from the concerns of damage, there may be instances of blackouts and power grid shutdown in times of conflict, which would impact the operations. So, insurance companies are now also looking at coming up with business interruption coverage, which would add to the insurance cost. Further, the possibility of enhanced security apparatus at the generation locations and other associated infrastructure would also come with an added cost."

Developers taking up projects along these areas may see an increase of 3-5 paise in the tariffs, he added.

Queries emailed to the Union ministry of new and renewable energy remained unanswered till press time.