Deferring New Solar Bids Until Backlog of Unsigned PSAs is Cleared the Way Forward

Deferring new bids until the backlog of unsigned power sale agreements (PSAs) with the distribution companies (DISCOMs) is cleared by the Solar Energy Corporation of India (SECI) may be the way forward for the solar sector in India.

This was the feedback at a discussion ‘Policy Flip Flops Between Intention and Action – The Cog in the Solar Growth Story‘ on Day One of the Mercom India Solar Summit.

The panelists were S.K. Mishra, Director (Power System), SECI, Aditya Singh, Associate Partner, Link Legal India Law Services, Parag Sharma, Founder and CEO, O2 Power. The discussion was moderated by Priya Sanjay, Managing Director, Mercom India.

Many renewable energy projects are staring at an uncertain future as SECI has not been able to find buyers for the electricity generated by solar and wind projects.

Representing SECI on the panel, Mishra said one of the learnings for SECI had been that going forward, “I have to sell (clearing the backlog of unsigned PSAs) before the next auction is held.”

“We never thought the tariffs would go so low so fast,” he said, but hope tariffs would go up by ₹0.30/kWh in future bids, considering that they would have to account for the levy of basic customs duty (BCD) on imported solar modules and cells from April 2022.

When asked what could be done to make DISCOMS buy renewable energy, Mishra said that ultimately, DISCOMs would have no option but to buy power from renewable sources considering that it is the cheapest.

Parag Sharma of O2 Power said that the biggest challenge before solar developers was the backlog of 18 GW of unsigned power purchase agreements (PPA) and PSAs. “Central public sector undertakings like SECI and NTPC should act in a coordinated manner … this 18 GW (of pending PPA/PSAs) has to be sold.”

Referring to the cancellation of 700 MW of solar tenders by Gujarat Urja Vikas Nigam Limited (GUVNL) after issuing letters of award to developers including O2 Power, he said, “Gujarat should not be repeated. It is not a good sign for foreign investors.”

While developers have to abide by the contracts once signed, ‘the procurer can back out whenever it wants,” he said, calling for a solution perhaps by amending the terms of the competitive bidding process.

Both Mishra and Sharma agreed that SECI should come up with more wind and hybrid tenders. “We want more bids to come up and pending PSAs signed,” Sharma said.

Asked about the feedback to hybrid bids, Mishra said there were “no issues” about hybrid tenders. “They have better CUF (capacity utilization factor). We are going to bring two hybrid tenders soon,” he said. Round-the-clock power bids had also not posed any problems, he added.

Attorney Aditya Singh spoke about the proposed amendments to the Electricity Act and felt that the process of appointing members of energy regulatory commissions should be changed. It was felt that these members, who are appointed by the Ministry of Power, have a “perceived bias,” he said.

An independent regulatory regime will help resolve most of the energy sector’s problems, he added.

He also talked at length about Andhra Pradesh rescinding the PPAs it had signed with wind and solar power developers in 2019 and how the courts had “abdicated their responsibility.”

Singh said that power procurers should not enjoy unfettered rights to say “no” after the letters of award are issued to developers.

Panelists agreed that enforcement of contracts and resolution of disputes were key to the solar sector’s growth.

“Enforcement is key … courts should decide fast, say within six months,” Mishra said, adding that this was something that the government could look into.

Parag Sharma added that after the imposition of BCD on solar cells and modules and the ALMM (Approved List of Models and Manufacturers) notification, there was not much need for policy interventions in the solar sector for the next three-four years. He, however, said that there was a need for a waiver of inter-state transmission charges for solar and wind projects.

He said that if India does not get certain things right, “we will miss the 175 GW renewables target (by 2022) by a big margin, and also the 450 GW target (by 2030).

You can click here to register for the event concluding on April 9.