Power News We love to talk!

JAN 27 2017

Biggest Indian solar project stalls as Jharkhand balks at cost

  • Economic Times, ET Bureau / Hyderabad
  • Created: Fri 27th JAN 2017

India’s biggest solar power project has stalled as the state which sought bids from generators says it can’t buy the energy at prices it had agreed upon.

Winning developers in Jharkhand state are still waiting to sign power purchase agreements almost a year after the tender. In March, Jharkhand awarded contracts to build 1.2 gigawatts (GW) of solar. The state’s power retailer, Jharkhand Bijli Vitran Nigam Ltd, was supposed to sign the power purchase agreements in May 2016.

“We have asked for financial assistance of a few hundred crore rupees from the state’s finance department and are awaiting their response,” said R.K. Srivastava, chief secretary of the energy department in the state of Jharkhand.

The delay underscores the threat from financially strapped state power retailers to Prime Minister Narendra Modi’s ambitious renewable energy goals. State-owned power retailers in India had combined losses of Rs3.84 trillion as of March 2015, according to a report by KPMG. Jharkhand Bijli’s managing director, Rahul Kumar Purwar, couldn’t be reached for comment.

ReNew Power Ventures Pvt. Ltd, which is majority owned by Goldman Sachs Group Inc. scooped up 522 MW in the March auction. ReNew’s other investors include the Abu Dhabi Investment Authority and the Global Environment Fund.

Other winners included Suzlon Energy Ltd, OPG Power Ventures Plc, Acme Group, Adani Enterprises Ltd and SunEdison Inc. A Suzlon spokesperson was unavailable for comment. An email sent to the Adani Group wasn’t returned. OPG Power executives couldn’t be reached. In an email, ReNew Power executives declined to comment.

Solar auction

How much of the solar capacity awarded in March’s tender eventually gets built depends on whether the government provides the backing, Srivastava said. Tariffs awarded in the auction ranged from Rs5.08 to Rs7.90 per kilowatt-hour depending on the size of the project, all of which were supposed to become operational between May and November this year.

“There is a huge difference between the average tariff of nearly Rs4.3 a unit, at which the discom buys power, and the rates quoted for solar energy in the auction last year,” Srivastava said in a phone interview, referring to the term used to identify electricity distribution companies in India.

The poor financial health of the country’s power retailers has been identified as one of the biggest hurdles to Modi’s climate pledge to install 175 GW of renewable capacity by 2022. Those losses mean discoms can’t buy more electricity to satisfy expected demand whether clean or conventional, nor can they add more customers. That ultimately leaves latent power demand unmet.

Several domestic and overseas clean energy companies have said they haven’t received payments for the electricity they generate for more than 10 months, racking up deficits of several hundred million dollars that may put the country’s green power ambitions at risk.

Jharkhand’s state discom has liabilities of Rs6,400 crore, according to government data. As marquee investors find themselves at risk, the central government has asked for a quick resolution of the matter.

The government faces embarrassment should the situation in Jharkhand not be resolved, according to a senior official at the ministry of new and renewable energy who requested anonymity because he isn’t authorized to speak to the media. The ministry has asked the state to resolve the matter, the official added.



Adani Enterprise Limited Jharkhand Finance Distribution Companies Renewable Energy Suzlon Solar Energy Tariff Clean Energy Ministry of New and Renewable Energy Energy Power Adani Group Electricity India solar power KPMG Solar

Related News

  • Revive 1 lakh MW plants to tackle power problems: Advisory group  Read more
  • Power generation: More is not merrier  Read more
  • OERC upholds CESUs petition to recover dues from WESCO and NESCO  Read more
  • M.P. CM asks officials to work for 24-hour electricity  Read more
  • DERC fixes tariff and approves PPA for TPDDLs solar power plant at Bawana  Read more
  • Ashok Kumar Balyan takes over as CEO of Reliance Group's oil & gas business  Read more
  • Wheels India signs tech agreement with Spanish company for wind components  Read more
  • Videocon eyes 13% market share in AC segment with new solar energy powered range  Read more
  • Water, Fire, and Costa Ricas carbon- zero year so far  Read more
  • Rajasthan pips Gujarat in solar power, becomes No. 1 in country  Read more