1. Solar power: Jharkhand discoms seek additional upfront subsidy

Solar power: Jharkhand discoms seek additional upfront subsidy

Renewable energy developers hit by delayed payments from discoms have a new problem in Jharkhand. The state hasn’t signed power purchase agreements (PPAs) with the developers, though they had won the bids for supplies to its discoms as early as March this year. Sources FE spoke to said the delays in signing of PPAs have […]

By: | New Delhi | Published: October 19, 2016 6:12 AM
In the meantime, key officials in the states’s power department who were conversant with the bidding process have moved out, causing further delay in decision-making. (Reuters Image) In the meantime, key officials in the states’s power department who were conversant with the bidding process have moved out, causing further delay in decision-making. (Reuters Image)

Renewable energy developers hit by delayed payments from discoms have a new problem in Jharkhand. The state hasn’t signed power purchase agreements (PPAs) with the developers, though they had won the bids for supplies to its discoms as early as March this year.

Sources FE spoke to said the delays in signing of PPAs have been because the state distribution company had recently written to the finance department seeking upfront subsidy for buying 1,200 MW of solar power, citing that it is more expensive than the current average power cost for the state. However, the discom and state finance department is yet to reach a consensus on the increased subsidy.

In the meantime, key officials in the states’s power department who were conversant with the bidding process have moved out, causing further delay in decision-making.

“There are procedural issues that the government is working out, but we aren’t aware of the exact reasons of delay as its outside the purview of the agency,” Jharkhand Renewable Energy Development Agency (JREDA) director Niranjan Kumar told FE.

Jharkhand Renewable Energy Development Agency (JREDA) initiated a competitive bid for setting up of 1,200 MW solar projects in the state in December last year.

After several extensions the bids were finally submitted in February this year and opened a month later. Though the successful bidders were issued letter of interest (LoIs), which is a pre-PPA formality, for 1101 MW in May after a deviation of two months from the initial bid timelines. However, the state has refused to sign PPAs five months since. “We met the CM twice a few months ago, who assured us that PPAs would be signed within 10 days,” a developer told FE. He added that while the Jharkhand CM was canvassing for investment in his state all over the world, the interested investors looking for PPAs had been left in the lurch.

Renew Power had won the largest chunk of the tender with 522 MW at an weighted average tariff of about R5.15/unit. The other companies that managed to win the rights for developing solar plants include ACME and Adani Power. The overall weighted average for the entire capacity was R5.26/unit.

“The delay in PPAs means that our bank guarantee of about R150 crore is sitting idle. We have also invested office space in Jharkhand and on land surveys,” Parag Sharma, COO, Renew Power, told FE.

He added that he was hopeful the state would soon sign the PPAs as despite delays in several cases no state has reneged on the agreements in the renewable space thus far.

Renewable energy developers have been facing issues related to delays in signing final contracts. Telangana had also delayed the same for its 2,000 MW solar projects, but eventually signed the agreements early this year.

Maharashtra has stopped signing PPAs with wind power developers for nearly two years. Tamil Nadu has also been reported to have asked renewable developers to back down generation as the state went for buying cheaper spot power from the exchanges.

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