SECI delay in agreements with distribution companies likely to hit renewable energy projects

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Solar power panels in Punjab

The delay in signing power supply agreements (PSA) by Solar Energy Corporation of India (SECI) with discoms (distribution companies) for over 20,000 MW of power projects awarded in the last one year is threatening the renewable energy target of 175 giga watt (GW) by 2022, reports Financial Express.

Manufacturing projects of 12,000 MW was awarded in June 2020, while the peak-off-peak units of 1,200 MW were awarded in February 2020. In addition, RTC (round the clock) projects of 400 MW were awarded in May this year. There are several other projects, totalling around 6,500 MW that were awarded in the last one year and are awaiting PSA with discoms.

In a recent MNRE notification for procurement of power from grid connected hybrid renewable projects through tariff based competitive bidding, a clause adds that if the nodal agency (SECI) is unable to enter into PSA within six months of issue of letter of award, then those projects will get cancelled.

Industry experts believe the delay in signing power supply contracts has more to do with drop in module prices which gives an impression that tariffs may fall further. The latest project awards for RTC and peak-off peak were costly in comparison to prices on power exchanges, although they are comparatively different in terms of specifications.

The discoms are wary of the must-run status of renewable power and the renewable purchase obligations, which makes it compulsory to buy a percentage of renewable power depending on state’s resources. The Rs 2.66 per kilowatt-hour (KWh) price for manufacturing projects is among the cheapest so far.

The Union power ministry has mandated all discoms to purchase at least 21% of their total energy requirements from renewable energy sources by 2021-22.SECI, however, is confident of achieving the target in coming months as it believes Covid played the spoil sport in holding physical meeting with discoms and expects some of the PSAs to be signed in coming months.

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