Uttar Pradesh government proposed a target of generating 10,700 MW solar power by 2022 on Tuesday, just a day after Uttar Pradesh Power Corporation Limited (UPPCL) struck down power Purchase Agreements (PPAs) with six companies for delay in setting up solar power plants.
Uttar Pradesh’s aim to generate 8 percent of state’s power from renewable source is in line with India’s target of reaching 170 GW of renewable energy capacity by 2022, of which 100 GW is to be generated from solar power.
According to the Draft UP Solar Power Policy-2017, the state will set up solar parks with a minimum capacity of generating 100 MW. Out of which, the 50 percent of the power generated is mandated to be sold to a UPPCL Distribution Licensee, adding to the state’s utilities revenue.
The state has promised to provide a Central Financial Assistance (CFA) of Rs 25 lakh for a detailed project report, Rs 25 lakh (or 30 percent of the project cost) for the solar park and subsidy of Rs 10,000 per KW to encourage grid connected roof top solar set ups.
However, the recent withdrawal of agreement from six companies is likely to affect UP’s 2017 Solar Power Policy as the move has upset the developers in UP who are seeking legal alternatives for the same.
“Our projects are more or less ready, but transmission lines are still to be drawn. We have to match our own project timeline with that of transmission timeline, lest the modules get degraded. It is unfair to pin all the blame on us and cancel the projects due to that,” an official of a company whose project has been cancelled told Financial Express.
The six companies, which were a part of the agreement with 15 companies under the state’s 2013 Solar Power Policy, had an aggregated capacity of 80 MW of solar power.
Apart from the delay in setting up of solar power plants, the rift between the stakeholders widened as UPPCL objected to the companies’ setting up the solar panels now as per the previous arrangement even though the cost of solar panels reduced drastically.
Allowing the remaining six companies to set up solar panels by extending the deadline, would have give them ‘undue benefits’ compared to the other nine companies who completed the agreement in time.
A shortfall in the state’s solar power generation is likely to affect the country’s growing solar capacity.
Earlier, ratings agency ICRA reported that India’s solar capacity addition is expected to increase from 3.5-4 GW in FY17 to at least 7-7.5 GW (in grid connected utility segment) in FY18.
With successful implementation of this policy, UPPCL could help generate over 6 percent of India’s required target of 100 GW solar power generation by 2022.
However, there are other roadblocks in the discom sector which the state and the Centre needs to check.
“The demand for solar power will come from UP. But concerns regarding ease of doing business persist as the state has been pushing developers for a downward revision of already committed PPAs,” Associate Director – Consulting at Bridge to India Jasmeet Khurana told Business Line.
Owing to the decline in price of solar panels, UPPCL had earlier called all 15 solar developers, who had signed the contract then under tariffs ranging between Rs 7.02 per KHW and Rs 8.60 per KHW in December 2015, asking them to voluntarily agree to the lowest bid of Rs 7.02 per KHW.