The center is set to propose rules for pooling solar tariffs and also aims to increase renewable energy bundling in existing thermal power purchase agreements (PPAs) to boost renewable energy supply, union energy secretary Alok Kumar told the Indian Express. The government aims to increase the installed capacity of renewable energy to 500 GW (GigaWatts) by 2030.
“The intention is to have a pool in which various purchases that are made over a year, two or three years, their tariffs are pooled so that there is no problem that (some tariffs are) 5 paise lower or 5 paise higher,” Kumar said on the issue of discoms (electricity distribution companies) waiting for solar tariffs to come down further before making supply deals. Kumar noted that the Ministry of Energy was working with the MNRE and would issue rules to address the issue.
Solar tariffs have fallen steadily over the past decade to a low of less than 2 rupees per unit (1 unit = 1 kWh) in December 2020 due to falling solar panel prices and falling demand. financing costs. The downward trend in solar tariffs has led many players to wait for tariffs to come down further instead of entering into long-term electricity supply agreements.
“Solar rates fell to 3 cents or less from 2.5? per kWh (kilowatt-hour) because solar panel prices have been falling for a very long time,” said Debasish Mishra, partner and head of Deloitte India, noting that solar prices had recently started to stagnate or fluctuate. Mishra said SECI (Solar Energy Corporation of India Limited) now “often finds it difficult to find buyers at uncovered prices as discoms expect tariffs to continue to fall further and many of them have already satisfied the renewable purchase obligations”.
Mishra noted that a transition to common tariffs could help accelerate solar energy supply by addressing discom concerns of losing lower solar tariffs in the future.
Kumar also said that the government expects around 10,000MW of renewable energy-based power to be bundled with fossil fuel-based power over the next 4-5 years, which will also help reduce the total cost of electricity supply for certain discoms.
Mishra quoted above said that “there are a number of old thermal power projects which are not viable due to high variable costs and are not being shipped in order of merit”, adding that discoms are forced to pay fixed costs due to the requirements of existing PPAs and that a decision to bundle cheaper renewables under these PPAs would help discoms reduce their average cost of electricity supply.
The center had issued guidelines in November 2021 that allowed thermal generation companies to supply electricity to customers from their renewable energy projects under existing power purchase agreements (PPAs) for the coal-based electricity, with gains from bundling renewables to be shared among producers. and (discoms) on a 50/50 basis.
