HPPC asks SECI to allot solar capacity at fixed rate to fulfill its RPO target

HPPC petitioned to seek in-principle approval of the commission to purchase 250 MW of solar power from SECI under 2000 MW ISTS scheme. HPPC wished to purchase 250 MW of power from SECI at INR 2.93/kWh (excluding trading margin)  fixed rate for 25 years in order to meet the state’s solar RPO targets. The commission approved the petition and asked HPPC to deposit a filing fee of INR 2 Lakh. SECI has agreed to allot 100 MW solar project capacity to HPPC at 2.54/kWh (excluding the trading margin of INR 0.07 kWh) against the requisite of 250 MW.

The solar Power Purchase Obligation target till FY 2022 is as below:

Financial Year

Solar RPO (as a percentage of total consumption)
2013-14 0.10
2014-15 0.25
20 15-16 0.75
2016-17 1.00
20 17-18 1.25
20 18-19 1.50
20 19-20 2.00
2020-21 2.50
2021-22 3.00

The existing solar power capacity available with Haryana Discoms is 125.8 MW. As per the current contracted capacity, the potential energy consumption for FY 2018-19 is supposed to be 41906 MUs and similarly, the availability of solar power projects in the coming years along with the shortfall situation is as below:

Read the order here.

RERC PROVIDES CLARIFICATION REGARDING DURATION AND TARIFF OF PPAS EXECUTED UNDER REC MECHANISM

Rajasthan Electricity Regulatory Commission (RERC) has released an order clarifying the duration of PPA’s executed under REC mechanism and for setting of tariff for the PPA’s executed under REC framework.

A petition was filed by Jaipur Vidyut Vitran Nigam Ltd., Ajmer Vidyut Vitran Nigam Ltd, Rajasthan Urja Vikas Nigam Ltd. and Jodhpur Vidyut Vitran Nigam Ltd. seeking clarifications with regards to PPA executed under REC mechanism from RERC.

 

The commission came to the conclusion that the operating period of PPAs shall be governed by the terms of PPA. Since as per the petitioners, all the PPAs executed under REC framework are valid upto 31.03.2019, it shall be followed. Also, the pricing methodology for determining the APPC under REC mechanism has been provided in the RERC (Renewable Energy Certificate and Renewable Purchase Obligation Compliance Framework) Regulations, 2010, it shall be followed. RERC will take the suggestions of the petitioners into consideration as and when it amends the REC regulations, 2010.

STATES IN INDIA BARRED FROM CANCELLING PPAS

The Government has barred the states in India from arbitrarily cancelling PPAs and has also imposed a penalty of 50% of the tariff. This notification has come after six states in the last two months have cancelled or renegotiated PPAs signed at higher prices. This is a welcoming move as it will make sure that the renewable energy sector keeps growing and the government is able to install 175 GW renewable energy by 2022.

 

The article covering the same can be accessed here

WIND TARIFF HITS A NEW LOW

In an auction held yesterday in Tamil Nadu by TANGEDCO, the latest tariff which has been determined is Rs 3.42 per unit. This is lower than the tariff determined in the auction held in February and below the tariff determined under FiT mechanism. The auction was won by ReGen Powertech, Leap Green Energy and Powertech India for 200 MW, 250 MW and 50 MW capacities respectively.

Keeping in view the recent trend of cancellation of PPAs which were signed at a higher rate, the power minister Sree Piyush Goyal has requested the state utilities to honor them as this can pose a threat to the development of the projects which have already been signed. Though this falls in line with the government’s initiative to have 175 GW RE capacity by 2022, it may also prove to be counterproductive.

The article can be accessed here.

MOP DETERMINES GUIDELINES FOR FOR COMPETITIVE BIDDING FOR POWER PROCUREMENT FROM SOLAR PV PROJECTS

The Ministry of Power (MoP) has released the guidelines for procurement of power from grid connected solar PV power projects. The guidelines are applicable to solar PV projects of size 5 MW and above. The purpose of these guidelines is to provide a direction for proper electricity procurement by distribution licensees and to protect the interest of the consumers. Also to make this process transparent and uniform.

 

Following are the salient features of the guidelines:

 

  • The appropriate Commission shall be CERC only in case if the distribution licensee is located in more than one state

  • SERCs will be the appropriate commission in case if there is a single distribution licensee.

  • The conditions to be met by the procurer are as follows:

  • The bid document should be prepared in accordance with the guidelines of MoP and the Standard Bidding Documents.

  • Clearances need to be procured from the end procurer, the agency developing the solar park.

  • Procurer has to specify where the project has been set up.

  • The bid structure shall be as follows:

  • The bids will be designed in terms of packages where the minimum will be 50 MW and the bids may be in energy quantity or power capacity terms.

  • The procurer may opt for either ‘tariff as bidding parameter’ or ‘VGF as the bidding parameter’.

  • The PPA period should not be less than 25 years and it can be in terms of energy or power. Repowering will be allowed from time to time for the duration of the PPA.

  • In case of default by the power generator, it shall be liable to pay the solar power generator as written in the PPA. Also, in such a case, the lender shall be allowed to exercise their right to substitution as per the substitution agreement provided in the PPA.

  • In case if the procurer is at default, it shall give its part of the PPA to a third party in the given time. In case if that is not done, the solar generators have a choice to terminate the PPA.

  • Once the procurer calls for bids, a single stage bidding process shall be followed. The procurer can also chose if an e-reverse auction shall be held. It is the responsibility of the procurer to give the details of the bidding process in case of a Solar park specific project.

  • For bid submission and evaluation, the bidders may form a consortium and chose a leader who shall be the focal point of contact. Also, for evaluation of bids, the procurer may form a committee. The technical and price bids shall be submitted separately along with a bid guarantee. Minimum number of bidders should be two and a proper methodology shall be followed for bid evaluation.

  • A 30 day period shall be given for bid submission from the issuance of RfS document. A table containing the time table for bid process is given in the guidelines attached below.

  • Bank guarantees such as earnest money deposit and performance bank guarantee need to be submitted.

The guidelines can be accessed here.

KARNATAKA’S DISCOMS CANCEL PPAS AFTER UP AND AP

After the UPERC cancelled PPAs with Bajaj Power owned units (as reported by TOI), BESCOM (Karnataka based DISCOM) cancelled its PPA signed before 31st March of a 75.6 MW wind power plant. The state’s energy department had already issued a letter to the DISCOMs to not sign anymore PPAs  as the state has sufficient wind projects to fulfill its RPO compliance. More such cancellations from the DISCOMs are expected. The industries which are more affected by this cancellation are Gamesha, Suzlon, Inox Wind, Sembcorp Green Infra and Mytrah.

 

This is going to be a very discouraging development for the wind industry since a number of PPAs were signed at a higher price which is no longer being accepted by the DISCOMs. A similar development was also covered on our blog.

 

The article can be accessed here.

 

COMPETITIVE BIDDING POSES A RISK ON THE FUTURE OF WIND ENERGY

The wind energy sector is in a distressed situation after the Union Government’s ‘tariff-based competitive bidding’ mechanism. Earlier, the SERCs used to fix ‘feed-in tariffs’ based on which, the the wind energy companies would sign PPAs with the distribution companies. Since the time this mechanism has changed (February), the state governments are not ready to sign PPA at the higher FiT rates, neither are they ready to take the competitive bidding route, thereby preventing any wind power installations from happening.

This has left the wind industry in a fix. Experts within the industry are predicting that there won’t be any new installations till March 2018. Specially the turbine manufacturers will suffer losses at least in this financial year and so will the image of the wind energy.

The article can be accessed here.

SOLAR TARIFF HITS ANOTHER NEW LOW

Solar tariff has hit another low in the auction held for the solar park in Rajasthan’s  Bhadla. The top slot was won by ACME, a domestic company for Rs 2.44 a unit for 200 MW. SoftBank Energy closely followed at Rs 2.45 for 500 MW. As per the analysis given in an article by Business Standard. there has been an 80% fall in solar tariff since the past 6 years.

 

As per a Livemint article, this drastic reduction in solar prices has caused a decrease in the number of clean energy deals as there is a fear that the DISCOMS will not honor the Power Purchase Agreements (PPAs) signed earlier at a higher rate since this has happened in the past.

A link to our previous analysis can be found here and here.

SOLAR TARIFF PRICES HIT A NEW LOW:

The solar tariff prices have hit a new low of Rs 3.15 per unit in an auction on Wednesday . The previous low in tariff was Rs 3.30 per unit in an auction which took place in the month of February.

 Source: Livemint (Dated: 13 Apr 2017)
In an article by Livemint, Mercom Capital Group has the following observations: This decrease in tariffs is causing the states to rethink and they are demanding a new power purchase agreement (PPA). This is causing the process of tendering and auctioning to slow down. An example of a state where such a thing has happened is Jharkhand. It is yet to sign its PPA for the 1000 MW solar capacity it had auctioned last year. The reason behind this is the subdued demand and poor financial condition of the discoms. The discoms which had signed their PPAs at a higher tariff are now going to find them unpalatable as they would lean towards cheaper tariff. Therefore, projects locked at higher tariffs will face delays in payments or power offtake curtailments. This might not only affect renewable energy power but also have an impact on renewable energy contracts.

KERC Revises Tariff for Mini-Hydel & Biomass Projects

The Karnataka Electricity Regulatory Commission (KERC) in its order dated 1st January 2015, has revised the Tariff for the Mini-Hydel, Co-generation and Biomass based power projects. The new tariff will be applicable to the projects that get commissioned during the period 01.01.2015 to 31.03.2018 for which PPAs have not been entered into, prior to the date of this order.

Projects for which power purchase agreements have been entered into before 01.01.2015, will not get the benefit of this tariff revision.

The tariff approved by the commission is given in the table below:

The revised tariff in case of Mini-hydel projects is Rs. 4.16 per unit as against Rs.3.40 previously, which has increased by 22%.Tariff determined for Bagasse based projects is Rs. 4.83 per unit for the first year of the commissioning of the project, which was Rs. 3.90 previously, an increase of approx. 24%. While in the case of biomass the tariff has been determined at Rs. 5.19 per unit against Rs. 3.66 per unit in previous order, a hike of about 42%.

 The commission has also approved the prevailing reactive power charges of 40 p/kVAh, till 31.03.2018.

The KERC Order can be reached here.

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