The Centre’s decision to terminate the services of Rameshwar Prasad Gupta, chairman & managing director (CMD) of the Solar Energy Corporation of India (SECI) could be a case of delayed retribution. While the government did not cite any reason for the move, the suspension of Gupta’s services “with immediate effect” just as only a month was left in his tenure, came in the backdrop of a raft of controversies around the public-sector nodal agency.
On Monday, the government gave Santosh Kumar Sarangi, secretary, ministry of new & renewable energy additional charge of SECI CMD, “till the appointment of regular incumbent or until further orders whichever is earlier.” Clearly, the Gupta’s termination signifies more than meets the eye.
To be sure, the renewable energy (RE) sector is one that has made major headway in recent years, and SECI played an important role in this. With rapid capacity addition, RE now accounts for nearly half of the installed power generation capacity in the country, up from a little over 30% a decade ago.
However, the agency hogged the limelight for all the wrong reasons in 2024. Its name surfaced, though without explicit incrimination, in the US indictment of Adani Group in November for alleged bribery of $250 million to Andhra Pradesh’s electricity distribution companies. The Indian conglomerate, according to the US Department of Justice, made the payout to secure power purchase agreements for its solar energy projects. There was also another row over submission of “fake documents” by Reliance Power to SECI for an RE project tender.
At the time, speaking to a TV channel on the US indictment case, Gupta had said that SECI was not facing any allegations and that there was no basis to probe anything.
In fact, the SECI had barred Reliance Power and all its subsidiaries from participating in future tenders to be issued by it for the next three years, citing “fake” bank guarantees submitted by the Anil Ambani-backed company in the RE bidding round. However, it later withdrew its order following the Delhi High Court’s stay on the company’s debarment.
The most recent controversy around SECI occurred in January where the Central Electricity Regulatory Commission (CERC) rejected the tariff discovered in the first ever grid-scale battery energy storage system (BESS) awarded by the agency in 2022. The commission said that there was “delay in signing power supply and purchase agreements (PSA and PPA)” and reduction in BESS prices over the last two years due to which it rejected the tariff.
SECI has over the years come out with tenders for assorted green energy projects including solar, wind, energy storage, green hydrogen, and hybrid technologies. The agency is responsible for developing these projects as part of the country’s Nationally Determined Contributions (NDCs). It releases tenders for selection of RE developers for establishment of solar projects and other RE projects on pan-India or state-specific bases.
SECI has come out with a number of RE project tenders in the last few years with companies like NTPC, Reliance, JSW Energy, ReNew, Avaada winning some of the latest contracts. Last year, the company revealed its plans to go public within one or two years.
The agency which serves as one of the Renewable Energy Implementing Agency (REIA) on behalf of the government, has been tasked to tender 20 giga watts (GW) of RE projects annually to help India achieve its target of 500 GW of RE capacity by 2030. Once a bidder is selected, SECI enters into a 25-year Power Purchase Agreement (PPA) with it for procurement of power.
Further, SECI also establishes back-to-back 25-year Power Sale Agreements (PSA) with the electricity distribution companies or buying entities for sale of the procured power from the chosen developers. However, there has been a delay in signing of PSAs in a number of projects.
Despite this, the finances of the agency have seen a steady and seen rapid improvement in recent years. The agency signs PSAs at a fixed trading margin of 7 paise per unit, which is its revenue stream. For instance, if the discovered tariff under the bidding process is Rs 2.5 per unit, SECI sells it at Rs 2.57 per unit to the discom, as per analysts.
SECI’s revenue from operations grew significantly to Rs 13,035 crore in FY24, up 181.8% from Rs 4,626 crore in FY20. In the last five years to FY24, the company saw a jump of 119.8% in its net profit to Rs 510.92 crore.
RE still barely account for a fifth of supplies to meet peak demand, as storage capacity creation is at a very early stage, and round-the-clock RE supplies are almost non-existent. The transition to an RE-dominant energy mix is inevitable for meeting India’s ambitious climate goals.