New Delhi: In what may dent India’s image as a green energy investment destination, Haryana’ electricity distribution companies (discoms) haven’t allowed solar project developers to use its power transmission and distribution networks to supply electricity to third-party and captive consumers by imposing new conditions, said three people aware of the development.
This move by Dakshin Haryana Bijli Vitran Nigam Ltd (DHBVNL) and Uttar Haryana Bijli Vitran Nigam Ltd (UHBVNL) to put on hold “final charging approval" comes in the backdrop of Punjab and Andhra Pradesh governments’ plan to renegotiate clean energy contracts. Once such charging approval is granted, these plants can start supplying electricity using the discoms’ and transmission companies' power network.
The firms with investment commitments of around ₹1700 crore in these open access solar power projects are: Malaysia’s state-run oil and gas company, Petroliam Nasional Bhd or Petronas’ Amplus Energy Solutions Pvt. Ltd, Royal Dutch Shell backed Cleantech Solar Energy, Netherlands Development Finance Company (FMO) backed Avaada Energy Pvt Ltd, and World Bank’s private-sector development arm International Finance Corporation (IFC) and Warburg Pincus backed CleanMax Solar.
Open access allows large users of power—typically those who consume more than 1 MW—to buy power from the open market, instead of depending on a more expensive grid. The union ministry of new and renewable energy (MNRE) and Invest India—the country’ investment promotion and facilitation agency—have also raised the issue with the Haryana government .
A Cleantech Solar Energy spokesperson in an emailed response said, “We (Cleantech Solar) would not like to quote on the matter as a company policy," and added, “We can confirm to you that the information you’ve received is correct. We have gone to HERC (Haryana Electricity Regulatory Commission) and APTEL (Appellate Tribunal for Electricity) to seek relief on this matter."
HERC is expected to hear the matter on Tuesday.
“International investors need certainty of regulations and policy to invest in any country. This is an unfortunate situation where large number of international investors are getting impacted due to an attempt to change the policy retrospectively that will make these hundreds of mega watts of solar plants stranded," added Sanjeev Aggarwal, founder and managing director of Amplus, one of India’s largest rooftop solar power producers.
Queries emailed to the spokespersons of CleanMax Solar, FMO, Avaada Energy Pvt Ltd, IFC, Warburg Pincus, MNRE, Invest India and Haryana state government officials on late Sunday evening remained unanswered.
According to a communication to ministry of new and renewable energy (MNRE) reviewed by Mint, Distributed Solar Power Association representing the solar firms said, “Govt. Of Haryana invited the developers under its Solar Policy 2016 and issued Final Connectivity to 348 MW of solar projects and Preliminary connectivity to approximately 500 MW projects through a detailed due diligence process set by the state authorities."
“Despite the approvals already being given, Connection Agreements of these projects are on hold by State owned Distribution Companies (DHBVNL, UHBVNL) since September 2019. In spite of repeated follow ups and escalations, none of the state authorities have clarified the reasons for the holdup in writing although it has been given to understand that the GoHR is interpreting the definition of “Captive", a term well settled under the Electricity Act, Electricity Rules and various APTEL judgements to deny Connection to the projects," the communication said.
Experts are of the view that with state governments increasing standard charges on open access renewable energy projects or cutting back on incentives, the financial future of many projects are in jeopardy. In a note, credit ratings agency ICRA said in June that with the changes in policy, the viability of open access is no longer as attractive.
“Two projects totaling 70 MW (Amplus, Cleantech) have already been completed, and two more projects of 100 MW (Avaada, Cleanmax) are under construction, and the remaining developers have made significant investments into land acquisition, financial closure and are ready to start construction," the communication said.
“You may kindly note that the governing Regulations lapse in March 2021 and any further delay in resolving the issues will not only sink the foreign investments but also take away an opportunity from the industries in Haryana to avail green power at competitive prices, a must in these difficult times. Any continued uncertainty will send wrong signals to international investors who are considering options to move their investments to India," the communication said.
Revisiting policy conditions could hurt India’s ability to attract investments and the perception about the sanctity of legal contracts. The development also assumes importance given the rapid pace of clean energy capacity addition by India. Clean energy projects now account for more than a fifth of India’s installed power generation capacity. India has 34.6 gigawatts (GW) of solar power, with an aim to have 100GW of solar capacity by 2022.
“We are also assured of the support from MNRE who are working very hard to fulfill our PM's target of 175 GW of renewable energy in the country by 2022. Such one-off instances of retrospective policy changes by some states reflect very poorly on the investment climate in the entire country and will make India's task of attracting foreign investment across sectors much more challenging in the times to come," added Aggarwal.
“Due to the lack of support from the distribution companies (DISCOMs) as well as policy uncertainty and flip flops on part of Government, developers are feeling apprehensive about their commitments towards the future of projects and their significant investment running into thousands of crores is at risk. It is matter of concern that since as applications for the establishing solar power plants under captive / group captive arrangement were made on the basis of guidelines issued by HAREDA (Haryana Renewable Energy Development Agency) / HVPNL (Haryana Vidyut Prasaran Nigam Limited) which were in ambit of Open Access Regulation Regulations of HERC," Solar Power Developers Association, a lobby group said in a statement.
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