Why both discoms and power generation cos prefer short-term contracts

Why both discoms and power generation cos prefer short-term contracts

Following a decline in solar tariffs, power distribution companies (discoms) are increasingly negotiating for short-term contracts with power generation companies.

Over the past few months solar power hit a record low tariff of Rs 2.44 per unit resulting in fewer clean energy deals for solar projects with high tariffs. This has also put more pressure on discoms to revise the terms of the solar power projects which were struck at higher price points.

And to tide over this problem, discoms are looking favourably at short-term contracts, which are roughly for a period of 1 to 5 years, as this would help them minimise their losses. A normal, long-term power purchase agreement can last up to 25 years which, against the backdrop of changing tariffs, can be unviable for discoms. Read More…

 

Credit By : MoneyControl

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