Af­ter UP, J’khand Man­ages to Rene­go­ti­ate So­lar Tar­iffs

Cos agree to lower rates as it will help them sign power pur­chase pacts

The Economic Times - - Companies: Pursuit Of Profit - Kaavya.Chan­drasekaran @times­group.com

New Delhi: So­lar power de­vel­op­ers who won the mega auc­tion of 1,200 megawatts of projects in Jhark­hand 16 months ago have agreed to re­duce tar­iffs, which will help them sign power pur­chase agree­ments.

Jhark­hand is the sec­ond state af­ter Ut­tar Pradesh to rene­go­ti­ate so­lar tar­iffs ar­rived at through an auc­tion. But while UP went back on signed PPAs, Jhark­hand has not ac­tu­ally signed any be­cause the state dis­tri­bu­tion com­pany found it too costly.

De­vel­op­ers had of­fered a tar­iff of .₹ 4.99 per unit of power to the Jhark­hand Re­new­able En­ergy De­vel­op­ment Agency (JREDA) at a re­cent meet­ing. Among the projects of­fered at 45 dif­fer­ent lo­ca­tions in the state, the win­ning bids ranged from .₹ 5.08 to .₹ 7.95, depend­ing on the size and lo­ca­tion of the project. The agency has not yet taken a de­ci­sion on the mat­ter, which may even be dis­cussed in the Jhark­hand Cab­i­net at its next meet­ing likely later this week. The big­gest win­ner in March 2016 Jhark­hand auc­tion was Re­New Power with 522 MW. Other no­table winners in­cluded Su­zlon En­ergy with 175 MW, OPG Power Gen­er­a­tion with 124 MW, Acme So­lar with 75 MW, Adani Green En­ergy with 50 MW and the now de­funct SunEdi­son with 150 MW.

Most of the de­vel­op­ers de­clined com­ment, given the del­i­cate stage of the ne­go­ti­a­tions. A soli­tary ex­cep­tion was ACME So­lar Hold­ings, which won 75 MW, and in­di­cated its will­ing­ness to dis­cuss a rea­son­able tar­iff re­vi­sion. “PPAs were not signed be­cause it was not ben­e­fi­cial for the state to get power at the ar­rived tar­iff,” said Nikhil Dhin­gra, CEO at ACME So­lar Hold­ings, which won 75 MW. “We re­main com­mit­ted to the state for fu­ture bids. It will re­ally help both par­ties if the gap be­tween the bid­ding and the PPA tar­iff adop­tion is min­imised for it to make sense for the state.”

Let­ters of in­tent were sent out

to the winners in May 2016, but there­after the state power dis­tri­bu­tion com­pany Jhark­hand Bi­jli Vi­taran Nigam (JBVN) re­fused to ac­tu­ally sign PPAs with the win­ning de­vel­op­ers. The de­vel­op­ers claim they were told the rates were too high as the state bought con­ven­tional power at about .₹ 4.30 per kwH.

JREDA of­fi­cials were un­will­ing to com­ment on why, de­spite let­ters of in­tent hav­ing been is­sued, PPAs had not been signed more than 16 months af­ter the auc­tion was held. Nor would they con­firm or deny the fresh of­fer from de­vel­op­ers.

But in an in­ter­ac­tion with ET in Oc­to­ber, a Jhark­hand of­fi­cial had hinted that the de­lay was due to both JREDA not hav­ing enough funds and its ap­pre­hen­sion that the win­ning tar­iffs at the auc­tion were too high.

Ten months later, the mat­ter has still not been re­solved. With LoIs al­ready is­sued, can­celling the bids is not an easy op­tion ei­ther for the state. In the mean­time, so­lar tar­iffs have fallen even fur­ther across the coun­try, thanks to a drop in in­put costs, with the low­est tar­iff reached be­ing Rs 2.44 per kwH at an auc­tion held for projects at the Bhadla So­lar Park in Ra­jasthan in May.

De­vel­op­ers say Jhark­hand tar­iffs were higher be­cause of many fac­tors. One win­ner, who did not want to be named, re­cently pointed out five of them in a let­ter to JREDA: low so­lar ir­ra­di­a­tion, rel­a­tively more ex­pen­sive land, the se­cu­rity threat posed by Nax­alites, in­suf­fi­cient power evac­u­a­tion in­fra­struc­ture and lack of any sov­er­eign guar­an­tee from the state gov­ern­ment that it would step in if the dis­com JBVNL were to de­fault.

“As com­pared to Ra­jasthan, Andhra Pradesh, Kar­nataka and Gu­jarat, so­lar ir­ra­di­a­tion in Jhark­hand is 7-9 % less, thus re­sult­ing in low plant load fac­tor for sim­i­lar plant de­sign,” the let­ter noted. “Jhark­hand has large for­est cover and large con­tigu­ous land without veg­e­ta­tion is scarcely avail­able. Land prices in other states are .₹ 3-5 per acre, whereas In Jhark­hand they are double and vary be­tween .₹ 8 lakh and .₹ 10 lakh per acre.”

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