Odisha Electricity Regulatory Commission (OERC) has approved the power purchase agreement (PPA) executed between Grid Corporation of Odisha (GRIDCO) and ACME Odisha Solar Power to procure power from a 25 MW solar power project at a tariff of ₹7.25 (~$0.089)/kWh.

Background

ACME Odisha Solar Power (formerly ACME Bikaner Solar Power) was the winner in the auction conducted by the Odisha Renewable Energy Development Agency (OREDA) in 2012 to commission a 25 MW solar power project by quoting a tariff of ₹7.28 (~$0.089)/kWh.

The project’s location was changed in 2013, and it was later commissioned in 2015.

GRIDCO and ACME had entered into a 25-year PPA. ACME has been exporting power to GRIDCO since 2015.

In its reply, TP Western Odisha Distribution (TPWODL), a power distribution company, argued that there had been a delay of nine years in placing the PPA for approval by the Commission. They also argued that since the PPA is yet to be approved, it would be beneficial for stakeholders to renegotiate the existing price considering the current trends of the solar power markets.

TPWODL noted that the recent rates approved by the Commission and GRIDCO are far below the rate of ₹7.28 (~$0.089)/kWh and that the present bidding trend of ACME is around ₹2.43 (~$0.030)/kWh.

According to Odisha Renewable Energy Development Agency, the tariff of ₹7.28 (~$0.089)/kWh was considered competitive as the CERC benchmark tariff in 2012 was ₹10.39 (~$0.13)/kWh. The solar market tariff was between ₹10 (~$0.12) and 12(~$0.15)/kWh.

During the hearing, the Commission raised questions about the current capacity utilization factor (CUF), the reason for the shift in the project’s location, the approximate operation and maintenance cost per megawatt, and the change in the variation of contract capacity.

ACME stated that it has been generating and supplying solar power to GRIDCO with a CUF of 20.6% during the fiscal year 2022-23.

ACME said the project location was changed due to a lack of contiguous land. The contracted capacity under the PPA is 25 MW and did not change due to the change of location. GRIDCO approved procuring the solar power with +20% CUF variation with no change in the lower slab of (-)10% variation because the available solar power was less in the State during 2013 to meet the renewable power purchase obligation (RPO) targets of GRIDCO.

ACME stated that the base operation and maintenance (O&M) cost at the time of commissioning was ₹800,000 (~$9,824)/MW with a 5% escalation. Therefore, the present O&M cost is equivalent to ₹1.05 million (~$12,890)/MW as the size of solar projects is comparatively small.

Commission’s Analysis

As none of the respondents objected to the PPA’s regularization, the Commission approved a tariff of ₹7.25 (~$0.089)/kWh in place of ₹7.28 (~$0.089)/kWh.

The Commission also ruled that the solar project should be treated as a must-run and would not be subject to merit order dispatch.

Earlier, the Commission had approved the power sale agreement between the GRIDCO and NTPC for 200 MW of inter-state transmission system-connected solar projects to fulfill its RPO.

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