The Central Electricity Regulatory Commission (CERC) has passed an order approving tariffs ranging between ₹3.15 (~$0.043)/kWh and ₹5.19 (~$0.071)/kWh for 3 GW of solar projects bundled with thermal power under NTPC Limited’s tender issued in 2015.
NTPC had filed a petition seeking CERC’s approval for the discovered tariffs in May 2020 even though the projects were awarded in 2017. The projects, spread across Andhra Pradesh, Karnataka, Rajasthan, Telangana, and Uttar Pradesh, were awarded to 29 companies, including Azure Power, ACME Solar, ReNew, Tata Power, SBG Cleantech, and Prayatna Developers (Adani).
NTPC submitted that the successful bidders were selected and the final tariffs were set between ₹3.15 (~$0.043)/kWh and ₹5.19 (~$0.071)/kWh and that it had also made arrangements to sell the 3 GW of power to the respective distribution companies (DISCOM) for the same tariff. It also set a trading margin of ₹0.07 (~$0.0009)/kWh on this tariff.
NTPC said that the delay in approaching the CERC for tariff approval was due to ambiguity regarding the jurisdiction of the central and state electricity regulatory commissions (SERC) in the approval and procurement processes. It explained that companies under the central government are expected to approach both the central and state commissions for tariff approval for ‘bundled’ power projects.
The company explained that this requirement was not there in the guidelines or the bidding documents. Distribution licensees had to approach their respective state electricity regulatory commissions for procurement approval. However, it noted that the projects were already commissioned and had started supplying power under their power purchase and sale agreements to DISCOMs. They were also being paid for it.
The Commission noted the considerable delay in NTPC approaching the CERC for tariff adoption. It said that NTPC should have acted immediately but had demonstrated “utter negligence and lack of diligence” in its decision to delay financial transactions for so long despite knowing that the tariff had not been adopted as per guidelines.
It also cited the petitioner’s submission that there had been no adverse impacts on solar power developers or DISCOMs due to this delay and declared that this could not be used to justify their negligence.
The Commission ruled that the successful bidders were selected, and NTPC discovered tariffs after a transparent process of competitive bidding as per the prescribed guidelines issued by the Ministry of New and Renewable Energy.
It subsequently adopted the tariffs discovered through the competitive bidding process with effect from May 26, 2020. The tariffs will be valid for the entire duration of the power purchase agreements signed with the successful bidders.
Recently, the CERC adopted tariffs of ₹2.83 (~$0.038)/kWh for 250.8 MW and ₹2.84 (~$0.039)/kWh for 190 MW of wind power projects (Tranche-VIII) connected to the interstate transmission system. The tariffs would be valid for the entire period of the power purchase agreement.
In another order, it approved a tariff of ₹2.54 (~$0.035)/kWh for 1,150 MW of solar projects allocated to ReNew Solar Power (300 MW), Azure Power (300 MW), Ayana Renewable (300 MW), and Mahindra Susten (250 MW).
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.