Over 9.2 GW of Solar Power from SECI Remains Unsold Due to Lack of Offtakers

The tariffs of the unsold capacity range from ₹2.42 (~$0.029)/kWh) to ₹4.99 (~$0.059)/kWh

thumbnail

Over 9,200 MW of renewable energy capacity comprising solar, wind-solar hybrid, solar with battery energy storage systems (BESS), and firm and dispatchable energy (FDRE) across 33 projects is stranded for want of offtakers.

In the latest list of unsold power (9,296 MW) released by the Solar Energy Corporation of India (SECI), all projects except those by the public sector NTPC Green Energy are of private developers.

Besides SECI, other renewable energy implementing agencies (REIAs), such as NTPC, NHPC, and SJVN, also issue power procurement tenders. The REIAs have been mandated to bid out a total of 50 GW of renewable energy projects annually until the financial year 2027-28. The cumulative unsold inventory with all four agencies would be even higher.

The REIAs issued 16.2 GW of tenders in the third quarter of 2024, an increase of 51.9% from 10.7 GW in the previous quarter and 19.2% from 13.6 GW in the same quarter last year.

Adani Green Energy accounts for the highest inventory of unsold power at 1,799 GW, with a tariff of ₹2.42 (~$0.029)/kWh discovered in the reverse auction.  Azure Power’s projects are next with 967 MW (300 MW at a tariff of ₹2.54 (~$0.03)/kWh and 667 MW at ₹2.42 (~$0.029)/kWh). These projects were part of the manufacturing-linked solar project tenders.

NTPC Renewable Energy’s projects have a total capacity of 650 MW, waiting for offtakers.

Other developers accounting for the unsold capacity include ReNew, ACME, Juniper Green, Asuari Renewables, Hero Solar, JSW, Avaada, and AMPIN.

The unsold capacity under the ISTS Manufacturing-Linked Solar Program is 2,766 MW, 2,900 MW under Tranches XI, XIII, XIV, 700 MW under Tranche XV (Solar with BESS), 450 MW under Tranche XVI (program governed by Uniform Renewable Tariff Mechanism), 600 MW under Hybrid Tranche VI and 1,200 MW under Hybrid Tranche VIII and 680 MW under FDRE-IV Tranche.

The tariffs for the unsold capacity range between ₹2.42 (~$0.029)/kWh) and ₹4.99 (~$0.059)/kWh, with the tariffs for the wind-solar hybrid, solar with BESS and FDRE projects higher than vanilla solar projects. The SECI trading margin of ₹0.07/kWh, in addition to the tariff discovered in the reverse auction, applies to these projects.

The lowest tariff discovered for utility-scale solar projects in 2023 was ₹2.51 (~$0.03)/kWh and ₹2.48 (~$0.029)/kWh in 2024.

At the heart of the problem of unsold power is the hedging by distribution companies (DISCOMs) to sign power sale agreements with SECI, given the trend of falling tariffs and uncertainty over payment of charges for inter-state transmission system. This is despite the renewable purchase obligations (RPO) prescribed for states and stiff penalties for non-compliance.

NTPC Green, which recently floated an initial public offering, had highlighted the risk of a delay or inability to find offtakers and signing of power purchase agreements (PPA) in its red herring prospectus. “There may be long delays from winning a bid and entering into a PPA … There is no assurance that our success in auctions will necessarily lead to the execution of corresponding PPAs promptly, or at all.”

As of June 30, 2024, NTPC Green’s pipeline capacity, for which a memorandum of understanding or term sheet has been entered with joint venture partners or offtakers but where definitive agreements (PPAs) have not yet been entered, comprised 10,975 MW.

The mandated bidding trajectory of 40 GW a year for solar comes in the backdrop of India’s target of installing a renewable energy capacity of 500 GW by 2030, but the challenge of REIAs to find procurers for the stranded capacity could put a spoke in the wheel.

RELATED POSTS

Get the most relevant India solar and clean energy news.

RECENT POSTS