India’s Ministry of New and Renewable Energy is seeking to defer penalties on about $1 billion of solar-thermal power projects that are delayed by a lack of water, financing difficulties and equipment shortages.

Seven projects totaling 470 megawatts in capacity by companies including by Godawari Power and Ispat Ltd., Reliance Power Ltd. (RPWR) and Lanco Infratech Ltd. (LANCI) that were to be ready by May, aren’t operational, Tarun Kapoor, joint secretary at the ministry, said in a phone interview from New Delhi. The projects could potentially forfeit about 2.3 billion rupees ($42.5 million) in performance guarantees, according to rules when the contracts were awarded in December 2010.

“There’s obviously a problem since all are delayed,” Kapoor said. “This is the first time solar-thermal projects are being built in India and we want them to succeed.” An expert committee at the ministry is recommending a 10-month extension for the projects, he said.

The delays are another blow to the solar-thermal industry suffering from high costs. France’s Areva SA (AREVA) had to scrap plans for a A$1 billion complex in Australia in November after failing to get financing. In contrast, a competing technology, solar photovoltaic, has benefited from a 61 percent plunge in panel costs over the past two years, according to data compiled by Bloomberg.

Solar-thermal plants, which focus sunlight on liquids to produce steam and drive turbines, are valued for their ability to store energy and produce power around the clock. Photovoltaic panels convert sunlight directly into electricity and need batteries for storage.

Godawari Ahead

A 50-megawatt project owned by Godawari Power is the closest to completion, Kapoor said. It’s undergoing final testing and should be finished by early June. Godawari Power’s Managing Director B.L. Agrawal wasn’t immediately available for comment.

A 100-megawatt project owned by billionaire Anil Ambani’s Reliance Power is about six months behind schedule, Kapoor said. A delay in laying a water pipeline by Rajasthan state authorities to the site stalled the plant, according to a letter sent by the Rajasthan government to Renewable Energy Minister Farooq Abdullah in March. Reliance Power spokesman Nagraj Rao declined to comment.

Lanco Infratech spokeswoman Deepkamal Kaur didn’t respond to an e-mail seeking confirmation of delays at its 100-megawatt plant. The company is also the contractor for KVK Energy & Infrastructure Pvt.’s 100-megawatt solar-thermal project.

The Indian projects, ranging from 20 megawatts to 100 megawatts in capacity, are using turbines from suppliers including Siemens AG, General Electric Co. and Areva.

India has built 1,686 megawatts of solar capacity and expects to award an additional 500 megawatts of solar-thermal capacity by 2017, Kapoor said. The outcome of the plants under construction could affect those plans, he said.

“It depends on how the technology behaves,” he said.

Source: Bloomberg