Revisiting PPAs- Déjà vu

Revisiting PPAs- Déjà vu

Its gloom and doom once again. Another state, this time Andhra Pradesh (AP), wants to terminate renewable energy power purchase agreements (PPA’s) citing comparatively high cost, inability to pay and system issues related to grid stability and idling conventional capacity. While the courts have rightly restored status quo for now its an opportunity to address the issue once and for all as India embarks on an energy transition.

A prima facie look at the government order (GO) and a carte blanche approach to renegotiation is not just arbitrary but devoid of any due process. Specifically, the PPA’s on wind and solar do not have a direct clause for renegotiation and projects awarded through a competitive auction have price discovery through a defined and pre agreed process.

This leaves the feed-in-tariff (FIT) projects and competitively awarded projects where due process or discrepancies in award, commissioning , delays and/or extensions could provide a just ground to not only renegotiate but penalize and /or terminate PPA’s  Read More

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