`48,000cr investment at risk

Renegotiation of tariffs in PPAs likely to impact investment, warns Crisil

Mumbai, Aug. 28: With many state discoms adopting measures such as grid curtailment and payment delays to compel renewable energy developers to offer discounts for PPAs signed in the recent years, investments to the tune of over `48,000 crore are currently at risk, says Crisil Research.

According to Crisil, the aggressive bidding for renewable energy capacities have started recoiling on the industry at large as discoms call for renegotiation of the power purchase agreements that they have signed in recent years at higher tariffs.

Some discoms have also adopted measures such as grid curtailment and payment delays to compel developers to offer discounts, it said.

Bid tariffs quoted were as low as `2.44 per unit for solar power in May 2017, down 45 per cent compared with `4.43 per unit in March 2016.

While for wind power, the quoted bid tariff of `3.46 per unit in February 2017 was 17 per cent lower than the lowest feed in tariff of `4.16 per unit in India. “This has prompted many discoms to openly voice their reservations on honouring the PPA or Letter of intent for nearly 3,000 MW. As a result, investments worth `48,000 crore are currently at risk,” Crisil senior director Prasad Koparkar said.

The 3,000 MW of PPAs were signed in states like Andhra Pradesh (1,100 MW), Gujarat (250 MW), Karnataka (900 MW) and Tamil Nadu (500 MW) at feed-in tariffs or at much higher than the recent bid tariffs.

In all, 7,000 MW of solar projects tendered and awarded at tariffs of `5-8 per unit over fiscal 20152017 could be at risk, it said. Also PPAs or LoIs for these capacities, in UP, Andhra Pradesh, Karnataka, Telangana and Punjab, were inked at tariffs 12-66 per cent higher than the APPC of these states. Even in wind energy, 2,000-3,000 MW of projects which were allotted or had PPAs signed over Q3-Q4 fiscal 2017 at feedin tariffs are at high risk of renegotiation. — PTI