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Karnataka’s electricity regulator has refused to approve the power purchase agreements (PPAs) for wind power projects that were commissioned before March 31, 2017, without a fresh tariff reduction of 17% to Rs 3.74/unit. The decision would impact 242.5 MW of wind power plants with a capital cost of about Rs 1,350 crore in the state. Apart from Indian companies such as Suzlon and Inox, the decision would adversely affect projects of foreign companies such as Siemens Gamesa and Green Infra.
The wind energy-independent power producers’ association has already filed a petition with the Appellate Tribunal for Electricity (Aptel) challenging the Karnataka regulator’s order. The ministry of new and renewable energy (MNRE) had asked the states to honour the terms of PPAs with renewable energy producers after a series of instances of states/regulators seeking changes in terms of PPAs already signed.
Sources said the projects concerned in Karnataka have been generating power for at least last six months without raising any bills due to lack of clarity on tariffs. Karnataka recently modified its existing wind tariffs through an order dated September 4, even though the control period of the previous tariff was supposed to last till October, 2018. “The current KERC directive on Karnataka tariff is certainly a setback for the wind industry in the state. The investments for the projects in question were made 3 years ago and the commercial viability of these projects were worked out based on the then prevailing feed-in tariff,” said Ramesh Kymal, chairman and managing director, Siemens Gamesa Renewable Power.
“While the IPPs have already signed PPA’s for these projects with the state’s discoms, the recent tariff revision by KERC, has hurt the investor confidence in the state,” Kymal added. The decision comes shortly after the Solar Energy Corporation of India managed to get bids as low as Rs 2.64 a unit in the second competitive bidding for wind energy of 1,000 MW. After the first such auction held in February, where wind tariffs dropped to Rs 3.46/unit, there were a series of issues across Andhra Pradesh, Karnataka and Rajasthan where state-owned discoms wanted to renegotiate previously agreed prices.
MNRE in August told seven wind energy producing states that wind power projects, which have already signed power purchase agreements (PPAs) and were commissioned before March 31, should not face problems in selling power due to lack of regulatory consent. It added that the states may also consider using Section 108 of the Electricity Act, 2003, which gives the states more power, to approve such power transactions.
The aforementioned MNRE letter had noted that not approving such wind power projects “creates an atmosphere of uncertainty in the wind power sector and going back on contractual documents like PPAs may not be appropriate.” The development comes at a crucial time when the country is seeking investments of $ 100 billion to achieve the target of 175 GW of renewable capacity bu 2022. To that end, it is organising the second edition of the “Global Renewable Energy (RE) Investors Meet and Expo (RE-INVEST 2017)” to be held from December 7-9. Out of the Rs 4 lakh crore investment pledged in the first edition of RE-INVEST in 2015, Rs 1.8 lakh crore has been fulfilled.
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