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Jharkhand loses steam for Solar power purchase agreements

Jharkhand loses steam for Solar power purchase agreements


Developers who won an auction of solar project contracts in Jharkhand are still waiting for the state’s government-run electricity distributor to sign power purchase agreements, six months after they emerged the successful bidders. The March auction, with contracts for 1,200 MW of projects in 45 places up for grabs, was one of the largest single auctions to have ever been held in the country. Companies that won the projects are waiting for the Jharkhand Bijli Vitaran Nigam to sign the PPAs which they will need to arrange funds from lenders and other sources. “We have submitted all the necessary documents but PPAs have not been issued,” said one of the developers. The auction saw winning tariffs between Rs 5.08 and Rs 7.95 per kwH. This was fairly high compared with auctions in other states, where the winning tariffs this year were Rs 4-5 per kwH. Solar radiation in Jharkhand is relatively low and land prices high, which prompted the cautious, high bids, developers claimed.

Industry sources said the delay was mainly due to the Jharkhand government having second thoughts on the tariffs that had been agreed to. “They arbitrarily asked for a lower price,” said Sunil Jain, chief executive of Hero Future Energies, one of the winners. “I doubt our projects can be executed at the price they are now asking for.” A senior official at the Jharkhand Renewable Energy Development Agency said the price is a concern, but that won’t hurt the projects. “The discom feels that solar power at the rates that have been agreed to is costly,” said the official. “It has asked the state finance department for more money and expects a response by next week. If necessary, the matter will be taken to the cabinet. The projects will be executed.” The poor financial health of the discom makes it all the more difficult for it to pay high rates. It stood last in a rating of discoms by the Ministry of Power in 2015.

“Why did JBVN even take this on when it did not have the financial capacity to do so,” asked a developer. Jharkhand’s RPO (renewable purchase obligation) is only 200 MW. RPO is a minimum quantity of power, determined by the Ministry of New and Renewable Energy, which every state must buy from renewable sources. Not all developers were as despondent. ReNew Power was the biggest winner in the Jharkhand auction, bagging 522 MW. “We have no doubt that our projects will be executed,” said Parag Sharma, Chief Operating Officer, ReNew Power. “JREDA has been assuring us it will stick to the prices agreed upon. There have been issues in Jharkhand — the chief secretary changed, the JREDA head changed — and all this has contributed to the delay.” But Sharma said the delay didn’t augur well for a state seeking investment.

Anand Gupta Editor - EQ Int'l Media Network


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