Coal fired gencos face stiff competition from RE

Coal fired gencos face competition from RE www.infralive.com 29 Infra LIVE April 15, 2020 capacity from non-fossil fuel sources can be achieved by 2022 itself. The country has set a target to raise the capacity of installed renewable energy generation plants from the current level of 86.3 GW to 175 GW by the end of 2022. Prime Minister Narendra Modi had in September last year announced the plan on scaling up of renewable energy target to 450 GW by 2030 during the Climate Action Summit convened by the United Nations. The major challenges being faced by the renewable energy developers are land acquisition, evacuation infrastructure, non- conducive state policies, unwill- ingness of discoms to purchase renewable energy, delay in making timely payment to solar and wind generators by discoms, curtail- ment and seeking revision of power purchase agreements. Solar tariff The latest reverse auction for 1,200 MW of solar capacity, conducted by the Solar Energy Corporation of India (SECI), has seen the tariff drop to Rs 2.50 per unit. Though this is higher than the all-time low rate of Rs 2.44 per unit, it is much lower than Rs 2.71 per unit in the last auction during October 2019. The low rates are due to the relaxed norms incorporated in the latest SECI tender which safe- guards developers against a number of uncertainties. When states seek approval of the tariffs before procuring power from such projects, electricity regulators often delay the ratification process. The tender allows extension of the scheduled commissioning dates of solar projects if tariffs are not approved by regulators within three months. Also, in case module prices rise due to changes in customs and other duties, tariffs will be increased by Rs 0.50 per unit for every Rs 1 lakh of additional cost stemming from higher levies. Most of the additional capacity is seen to come from utility scale solar plants. The current solar capacity is more than 34 GW and out of this, about 5 GW projects have been commissioned under SECI tenders since FY15. Another 4 GW of SECI solar projects are under various stages of construc- tion. Karnataka, at 7.28 GW, currently has the largest installed solar capacity, followed by Rajasthan (4.84 GW), Tamil Nadu (3.79 GW), Telangana (3.62 GW) and Andhra Pradesh (3.56 GW). Kerala approves tariff of Rs 2.83/kWh to procure 200 MW of wind power from SECI The Kerala State Electricity Regulatory Commission (KSERC) has approved a tariff of Rs 2.83/kWh to procure 200 MW of wind power. The power sale agreement (PSA) was signed between the Kerala State Electricity Board (KSEB) and SECI in June 2019 and later amended on December 12, 2019. In addition to the tariff, the intermediary procurer (SECI) will also charge a trading margin, which will be in addition to the above tariff. In its order, the Commission noted that Rs 0.07/kWh is the maximum ceiling on trading margin for short term transac- tions. However, in the present case, the PSA is for a long-term contract for 25 years. The risks of scheduling and payment of long- term contracts are generally less when compared to short-term contracts, the state body under- lined. “Considering these reasons, there is no rationale in claiming a trading margin of Rs 0.07/kWh,” the order stated. The Commission has asked KSEB to negotiate with SECI to reduce the trading margin and to get its approval. As per the estimated electricity demand and the RPO targets, the Kerala state distribution compa- nies must procure 925 MW of power from non-solar renewable energy sources by 2021-22. 1,900 MW contracts at a price of Rs 4.24 per unit in the first round of the scheme that was launched in April 2018. Govt removes tariff caps for solar, wind power auctions Responding to the longstanding industry demand of removing tariff caps in renewable energy auctions, the ministry of new and renewable energy (MNRE) has decided that “cap or upper ceiling tariff will not be pre- scribed in future bids”. The tariff cap was one of the reasons cited by the indus- try, which slowed down the pace of adding renewable generation capacities to 8.6 giga-watt (GW) in FY 19 from 11.3 GW and 11.8 GW in FY17 and FY18, respec- tively. The other reasons were devaluation of the rupee, rising finance costs. MNRE has sent a letter to NTPC and the Solar Corporation of India (SECI) - the central government agencies which acts as the nodal agencies for conduct- ing the auctions - conveying the removal of such caps. The decision was taken in a meeting chaired by power minis- ter RK Singh held on January 31, 2020. As on January 31, 2020 the installed renewable energy capacity was 86.32 GW. Further, an additional 35.1 GW is under various stages of implementation and 34.5 GW under various stages of bidding. If their 45.4 GW of hydro and 6.8 GW of nuclear capacities are included, the target under the Paris climate change accord of having 40 per cent of installed power generation