NEW DELHI: The backlog of renewable energy (RE) projects that lack power purchase agreements (PPA) has declined sharply to 30 giga watt (GW) now, compared with around 40 GW in April, official sources said. A number of RE projects have signed the PPAs over the last few weeks, under tenders floated by the Renewable Energy Implementing Agencies (REIAs).
Moreover, the government is now under discussion with state governments and discoms to adopt a unified renewable energy tariff (URET) to further improve the situation.
The specified tariff, introduced in October 2023, proposes standardised pricing for RE in a specific region.
“We are willing to hold discussions with some of the discoms and state governments to understand what exactly is their apprehension with regards to URET and what kind of tweaking or clarification would they require to implement this,” an official source said. The person added that after this, more PPAs could get signed.
The official informed that currently there are some concerns among the industry players regarding the new mechanism. “Discoms have a lot of hesitation (with regard to URET),” the official said.
Power developers enter into PPAs with procurers, who in turn sign power supply agreements (PSAs) with electricity distribution companies (discoms). Power procurers include Renewable Energy Implementing Agencies (REIAs) like Solar Energy Corp of India (SECI), NTPC, NHPC, and SJVN.
“The projects with unsigned PPAs stood at 40-43 GW a few months back. Now it is at 30-33 GW,” said the official, adding that agencies like SJVN and SECI had done aggressive marketing with the states to sell off some of the pending inventories. “From about 12 GW capacity pending with SECI, it has been reduced to 5 GW,” the source said.
Even though the quantum of RE projects with unsigned PPAs has declined, it still lags behind given the government’s target of achieving 500 GW of non-fossil fuel based power by 2030.
Naveen Khandelwal, CEO, BrightNight India has told FE that many distribution companies (discoms) are taking time in signing of the PPAs either in hopes of a reduction in tariffs or due to “complexity” in the tender process.
“India would have signed more than 25-30 GW of PPAs in the last 12 to 18 months and bids for roughly 100 GW were called in the last two years. However, only 35-40 GW capacity (of PPAs) have been signed,” Khandelwal had said.
Discoms are taking time in understanding whether generation profiles fit into their scheme of things. Or else, they may be looking for tariff reliefs, claim industry experts.
Industry players have also requested the government for extension of the waiver on transmission charges until 2030 for projects with unsigned PPAs. At present, transmission charges are waived for a period of 25 years for renewable energy projects commissioned before 30 June 2025.
An increase in the tariff could further make power generated from renewable sources uncompetitive, increasing procurement costs of discoms. However, sources said that the extension of the waiver is unlikely to happen, coming into effect from July 1, 2025.
There are expectations among some states that the central government will waive inter-state transmission charges that have created delays in PPA signings. “These regulatory uncertainties impact investor confidence and stall project financial closures,” Kishor Nair, CEO of Avaada Energy had earlier said.
Source: The Financial Express
