Manufacturing-linked solar scheme: Kerala is first buyer; state govt agrees to buy 200 megawatt

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January 1, 2021 6:45 AM

According to sources, Seci has initiated preliminary talks to sell power from the bundled capacity with Jammu and Kashmir, Odisha and Maharashtra as well.

Since the February and June auctions discovered lower prices of Rs  2.5 per unit and Rs 2.36 per unit respectively, the composite pooled tariff is Rs 2.66 per unit.Since the February and June auctions discovered lower prices of Rs  2.5 per unit and Rs 2.36 per unit respectively, the composite pooled tariff is Rs 2.66 per unit.

The Kerala government has agreed to buy 200 megawatt (MW) solar power from the 12,000 MW capacity being built under the manufacturing-linked solar scheme for which the Solar Energy Corporation of India (Seci) has been struggling to find buyers.

Under the scheme, the tariff is Rs 2.92 per unit, much higher than the tariffs discovered in subsequent auctions. Kerala’s offer marks the first instance of a state agreeing to procure power under the scheme.

Kerala’s power regulator has allowed the state-run power distribution company (discom) to buy electricity from the manufacturing-linked tender at a maximum tariff of Rs 2.66 per unit. The price differential is enabled by the bundling policy adopted by Seci to find buyers.

According to sources, Seci has initiated preliminary talks to sell power from the bundled capacity with Jammu and Kashmir, Odisha and Maharashtra as well.

To make the power more palatable for discoms, Seci is bundling 3,000 MW from the manufacturing-linked capacity auctioned in January, with 3,200 MW of solar projects awarded through competitive bids in February and June. Since the February and June auctions discovered lower prices of Rs  2.5 per unit and Rs 2.36 per unit respectively, the composite pooled tariff is Rs 2.66 per unit.

Adani Green Energy will build 8,000 MW generation capacity and Azure Power will develop 4,000 MW solar plants under the manufacturing-linked solar scheme and supply power to Seci at Rs 2.92 per unit. As a part of the deal, the two companies will also build 3,000 MW of solar manufacturing capacities in the country (Adani 2 GW and Azure 1 GW). Seci being the national aggregator of renewable energy, signs power purchase agreements (PPAs) with the winning developers in competitive auctions, and subsequently inks power supply agreements (PSAs) with states to supply electricity from these plants.

Along with Adani and Azure, other companies which could find buyers through this pooled mechanism are ReNew Power, SB Energy (SoftBank), Amp Green, Ayana (CDC Group), IB Vogt Singapore and Avikiran (Enel). Azure had recently said that it expects “a tariff markdown from the price discovered in the (January) auction”, for the project to find power. Seci had informed the company that “so far there has not been adequate response from the state electricity discoms for Seci to be able to sign the PSAs at this stage even though we have a letter of award”.

As FE recently reported, solar projects with combined capacity of 18,000 MW is facing grim prospects with the state-run discoms developing cold feet on buying power from these projects, as tariffs discovered under subsequent auctions has fallen to the record-low level of Rs 1.99 per unit, buoyed by lower interest rates, declining solar panel prices, improved technology and assured purchase of power.

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