This briefing note evaluates the potential of indexed renewable energy (RE) tariffs to provide financial respite to discoms, thereby giving them vital breathing room to implement more durable and lasting reforms. RE tariffs have been on a downward trend for several years with record lows recently set once again despite a Covid-19 overhang. However, the scale of India’s RE ambitions is such that incremental capacity will inevitably result in a significant added cash outflow burden to discoms. The ability of demand to absorb the resulting increase in power generation is also a matter of concern.
[2]