Home India MNRE to states: Uncertainty on PPAs may hit new wind projects
MNRE to states: Uncertainty on PPAs may hit new wind projects

MNRE to states: Uncertainty on PPAs may hit new wind projects


NEW DELHI: India’s wind energy programme will be choked for two years and the momentum of the country’s ambitious programme for renewables severely hit because distribution companies have “practically stopped” signing fresh power purchase agreements, the Central government said in a note to states.

India added 5,400 MW of wind capacity, more than in any previous year, in 2016-17, exceeding the target of 4,000 MW. In the previous year, it added 3,423 MW, which was a record then. In the current financial year, only 228.40 MW has been added till end-June because many states and regulators are reluctant to sign PPAs for projects agreed upon when tariffs and costs were higher.

There are 3,000 MW of wind projects in various stages of construction and the country has the potential to expand wind energy generation substantially. The Ministry of New and Renewable Energy (MNRE) has cautioned principal secretaries (power) of the seven main wind energy producing states that if PPAs are not signed, there would be no further wind capacity addition either in 2017-18 or 2018-19.

States have been reluctant to sign PPAs since the only wind auction in the country held in February by Solar Energy Corporation of India (SECI), an arm of the MNRE. The winning tariff at the auction was Rs 3.46 per unit, lower than the Rs 4-6 per unit that discoms had been paying wind developers until then. Most discoms thus decided they had been paying too much for wind power and stopped signing PPAs at the earlier tariffs altogether. Since no further auctions have been held, signing of new wind PPAs has come to a halt.

Even if wind auction proceedings start at this stage, the projects would be completed only after 21 months as the sale process would take about three months and construction another 18, Bhanu Pratap Yadav, joint secretary, MNRE, noted in his August 23 letter to the states. “The projects through bidding process will get completed in 2019-20. In such a case there will be no wind capacity addition in 2017-18 and 2018-19 and states will not be able to meet their non-solar RPO requirement,” he said in the letter. RPO, or renewable purchase obligation, is the mandatory quantity of power states are required to draw from renewable sources every year.

This is the second time in three days that the MNRE is intervening with wind energy producing states of Gujarat, Maharashtra, Rajasthan, Madhya Pradesh, Tamil Nadu, Karnataka and Andhra Pradesh on behalf of developers. In his August 21 letter, (ET, August 23), Yadav urged states to warn their power regulators not to withhold approval of already signed PPAs with wind developers. State regulators had been sitting on such PPAs because they too were signed at earlier feed-in tariffs, higher than the auctiondiscovered price of Rs 3.46 per unit.

While encouraging states to hold their own auctions, Yadav advised them not to give up entirely on wind energy produced at higher tariffs.

“In order to continue the momentum of the wind energy sector in this transition period, the states may… continue to procure wind energy for the fulfilment of their non-solar RPOs,” the letter concludes.

Source: economictimes.indiatimes
Anand Gupta Editor - EQ Int'l Media Network


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