Developers, Jharkhand Government Resolve Solar Power Pricing Deadlock

Developers, Jharkhand Government Resolve Solar Power Pricing Deadlock

Solar developers and the Jharkhand government have resolved an 18-month long deadlock over the price of solar power, with the developers agreeing to a reduced tariff of Rs 4.95 per kwH.

The problem arose after the Jharkhand Renewable Energy Development Agency (JREDA) held a mega auction of 1,200 MW in March 2016 to set up solar projects at 45 different areas across the state. Winning bids ranged from Rs 5.08 to Rs 5.48 per kwH for the larger projects of above 25 MW and Rs 5.29 to Rs 7.95 for those below. The biggest winner was ReNew Power, which secured 522 MW.

Letters of intent were duly issued by Jharkhand’s discom, Jharkhand Bijli Vitaran Nigam Ltd (JBVNL), in May 2016 but thereafter it kept avoiding the actual signing of the power purchase agreements (PPAs) with the winning developers.

At meetings between the state government and winning developers, officials made it clear that the discovered tariffs in the auction were too high compared to those in other states and wanted them brought down, while the latter kept resisting any such revision. ET was the first to report on the standoff in its October 17, 2016, issue.

Meanwhile, solar tariffs kept falling in succeeding auctions, reaching a record low of Rs 2.44 per kwH in an auction conducted by Solar Corporation of India at the Bhadla Solar Park in Rajasthan in May this year. Last month, thedevelopers finally agreed to a reduced tariff of Rs 4.99 per kwH for projects above 25 MW, which the state government agreed to consider.

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“The tariff of Rs 4.95 per kwH of projects above 25 MW has been approved by the state cabinet,” said Niranjan Kumar, director, JREDA. “It has directed the discom to sign the PPAs, which will be done in a week. It is good that a decision has been reached.”

For projects below 25 MW, the tariff will be Rs 5.16 per kwH Kumar also revealed that the total size of the project was being reduced from 1,200 MW to 684.5 MW at the developers’ behest. “Actually, we had signed LoIs for 1,101MW,” he said. “Of these, SunEdison, which won 150 MW, has been excluded since it went bankrupt, while Acme Solar, which had won 50 MW, voluntarily withdrew.

The remaining developers wanted to reduce the sizes of their projects and we have agreed.”

Thus ReNew Power, which had won 522 MW will now limit its projects to 392 MW, Suzlon, which won 175 MW, will put up 130 MW, OPG Power Generation, winning 124 MW, will build 100 MW, Adani Green Energy, which got 50 MW, will build 40 MW —all of them at the tariff of Rs 4.95 per kwH. Only Madhav Infra, building 15 MW, and Karvy Solar, building 7.5 MW, will be paid Rs 5.16 per kwH.

During his tenure as minister for new & renewable energy and power, Piyush Goyal had repeatedly spoken out against renegotiating PPAs in the light of falling tariffs, while the ministry had twice written to some states to stick to commitments made to developers even if renewable energy tariffs had subsequently fallen. But Jharkhand can claim it was not renegotiating PPAs since it never actually signed them. Read more

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