The Kerala State Electricity Regulatory Commission (KSERC), in a recent order, directed the Solar Energy Corporation of India (SECI) to finalize the draft power sale agreement (PSA) for 300 MW of solar and forward it to Kerala State Electricity Board Limited (KSEB) by May 4, 2021. It also asked the nodal agency to submit the draft PSA for approval as per the Commission’s order dated March 23, 2021.

KSEB had filed a petition with the Commission, requesting it to approve the procurement of 200 MW of solar power from interstate transmission system (ISTS) -connected solar projects as offered by SECI to meet its renewable purchase obligation targets.

Background

SECI had offered 200 MW under Tranche-I of the 6,200 MW of ISTS-connected solar projects linked with manufacturing projects in India on a build, own, and operate basis to KSEB.

SECI, in its submission, said that out of the 6,200 MW in Tranche-I, 3,000 MW was from solar manufacturing projects (solar projects installed by solar module manufacturers) and 3,200 MW from other ISTS-connected solar projects. The tariff quoted in Tranche-I ranged from ₹2.36 (~$0.031)/kWh to ₹2.92 (~$0.039)/kWh. The weighted average of the tariff was ₹2.66 (~$0.035)/kWh under Tranche-I.

SECI further added that if the total capacity of 6,200 MW did not materialize, the final rate could vary between ₹2.36 (~$0.031)/kWh and ₹2.92 (~$0.039)/kWh, but it would not exceed ₹2.92 (~$0.039)/kWh in any case.

In December last year, the State Commission had directed KSEB and SECI to proceed with the procurement of 200 MW of solar power at the pooled tariff of ₹2.66 (~$0.036)/kWh.

SECI said that it had given a revised offer to KSEB for 500 MW of ISTS-connected solar power under Tranche-IX at a tariff of ₹2.44 (~$0.032)/kWh, including the trading margin of ₹0.07 (~$0.0009)/kWh to make it competitive. KSEB confirmed that they were interested in buying 300 MW of solar power under Tranche-IX at ₹2.44 (~$0.032)/kWh instead of 200 MW offered earlier under Tranche-I of manufacturing-linked projects at ₹2.66 (~$0.036)/kWh.

In its order dated March 23, 2021, the Commission directed KSEB to file an amendment to the original petition for procuring 300 MW of solar power at ₹2.44 (~$0.032)/kWh instead of 200 MW offered earlier under Tranche-I of the manufacturing-linked projects. It asked KSEB to submit a draft PSA signed by KSEB and SECI, incorporating the suggestions offered by the Commission.

Later, KSEB noted that they had already forwarded their comments to SECI to incorporate the suggestions in the draft PSA. SECI, in its reply, said that they would require three weeks to incorporate the suggestions. KSEB said that they would file the amendments to the original petition within ten days after receiving the draft PSA initialed by SECI.

Based on the correspondence, the State Commission asked SECI to finalize the draft PSA by May 4, 2021, and scheduled the next hearing on the matter for May 25, 2021.

In February, KSEB announced its willingness to procure 300 MW of solar power from NTPC at ₹2.51 (~$0.034)/kWh. NTPC had informed the state distribution company that since the projects were ISTS-connected, the power would be eligible for the waiver of ISTS transmission charges and losses for 25 years.

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