As states compete with each other to lower solar power tariff, companies have begun expressing doubts about the viability of solar power projects. Many renewable power companies gathered at a two-day green energy conference organised by CII in the city on Tuesday to discuss the issue.
“Capacity addition in the present financial year looks extremely difficult due to the standoff in signing power purchase agreements in several states at rates determined by the respective regulatory commissions,” said Siemens Gamesa Renewable Power chairman and managing director Ramesh Kymal.
The companies also expressed problems in getting timely payment for power supplied to discoms. “Payment security by discoms is an area of major concern for independent power producers. There is enormous delay in payments by discoms in certain states. Cutting down these delays and creation of an appropriate payment security mechanism will go a long way in enhancing the investor confidence and bankability of projects,” said Kymal.
The charges for using transmission facilities are quite high, he said, adding that companies were doubtful whether they could sustain solar and wind projects at low tariffs. “Steep reduction in tariffs due to increased competition in the solar sector has cut the tariffs by more than 40% over the last 18 months. The recent auction results have led to concerns among policy makers, power utilities, project developers, investors and financial institutions in particular,” he said.
State Bank of India deputy managing director Karnam Sekar raised doubts about the quality of panels used in solar project as the tariffs are falling below anybody’s imagination. “The solar power tariff across the country is falling and this raises doubts about whether the quality of panels used is good and whether it would withstand the entire project period,” said Sekar.
Tamil Nadu principal power secretary Vikram Kapur assured the companies about clearing the renewable power companies’ dues. “The issue of delay in payment of dues will be taken up with Tangedco. In recent years, the discom’s financials have improved and is likely to break even this year,” said Kapur. The secretary also suggested that the companies take up conversion of municipal waste into power in a big way.