The Odisha Electricity Regulatory Commission (OERC) has approved the power sale agreement (PSA) to be executed between the Grid Corporation of Orissa (GRIDCO) and NTPC for 200 MW of inter-state transmission system (ISTS) connected solar projects to fulfill its renewable power purchase obligation (RPO).

Background

NTPC offered solar power capacity to the tune of 400 MW at a tariff of ₹2.50 (~$0.031)/kWh, including a trading margin of ₹0.70 (~$0.0088) to be available after 2024 towards the RPO requirement of GRIDCO. Out of the 400 MW, GRIDCO decided to procure 200 MW of solar capacity considering the increased state consumption from financial year (FY) 2024-25. As the offered tariff was very competitive, a PSA was executed between GRIDCO and NTPC to procure the 200 MW solar power at ₹2.50 (~$0.031)/kWh for 25 years.

With the solar tied-up capacity of 1,731 MW and the non-solar tied-up capacity of 479.15 MW, GRIDCO will meet the solar RPO of 9.75% by FY 2024-25. Since the current solar power portfolio of GRIDCO is sufficient to meet the solar RPO till FY 2025-26, GRIDCO may not require this power for 2024.

However, as the landed cost of the power is low, GRIDCO felt it prudent to retain this power for the state. Without any RPO target beyond FY 2024-25, GRIDCO assumed an RPO target of 30% by FY 2029-30, which may go up. To meet any escalated RPO target, GRIDCO may need the 200 MW even in FY 2025-26.

The solar power from NTPC would be delivered to Odisha periphery without any ISTS charges as the government had extended a waiver up to June 2025. Hence, GRIDCO issued an in-principle consent to NTPC to procure an additional 200 MW of solar power for 25 years without any ISTS charges and basic customs duty (BCD).

GRIDCO had requested all four distribution companies (DISCOMs) of the state to convey their views on procurement. Tata Power Western Odisha Distribution (TPWODL) submitted that this additional 200 MW of solar power might not be required. However, procuring the 200 MW with a competitive tariff was reasonable, considering market volatility.

Tata Power Central Odisha Distribution’s (TPCODL) computation indicated that the capacity under the other RPO category was adequately met with the present approved tie-up. There might not be any need for further tie-up under this category, including solar.

Tata Power Northern Odisha Distribution (TPNODL) stated that the additional 200 MW of solar power could be procured from NTPC, subject to the Commission’s approval.

Commission’s Analysis

The Commission said that the tariff proposed by NTPC seemed competitive for 25 years. The tariff would be insulated from the implication of BCD and qualify for a waiver of ISTS transmission charges and losses. It noted that there might be an additional renewable power requirement beyond FY 2024- 25 over and above the current tied-up capacity to meet enhanced RPO.

The regulator, therefore, approved the PSA to be executed between GRIDCO and NTPC to procure 200 MW of solar power through ISTS-connected projects to fulfill its RPO.

In October 2021, OERC approved the standard and supplementary PSA between the Solar Energy Corporation of India and GRIDCO. The PSAs were for the 500 MW solar projects under the manufacturing-linked and ISTS-connected solar program (Tranche- I).

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