Solar power not finding buyers – Here’s what Centre plans to do

The 3 GW capacity to be combined with other projects is part of the 12 GW projects awarded in the maiden auction under the manufacturing-linked scheme.

To address the issue of solar power not finding buyers, the government will bundle projects in order to cushion the hit to state-run power distribution companies (discoms) from high tariffs discovered under certain auctions, Union power minister RK Singh told FE.

To start with, projects with a combined capacity of 3 gigawatt (GW) bid out under the manufacturing-linked solar scheme in January, will be bundled with a total 3.2 GW capacity awarded in the last two Seci auctions held in February and June. This means that the discoms concerned could buy power at a composite rate of `2.66 per unit, against a higher tariff of `2.92 discovered the manufacturing-linked scheme.

“Because the rates (under manufacturing-linked scheme) are high, the states have been reluctant (to buy), so standalone solar projects under two other rounds of auction have been identified and are being bundled with the manufacturing-linked solar projects,” Singh said.

The 3 GW capacity to be combined with other projects is part of the 12 GW projects awarded in the maiden auction under the manufacturing-linked scheme.

Adani Green Energy will build 8 GW generation capacity and Azure Power will develop 4 GW and supply power at Rs 2.92 per unit, under the scheme. As a part of the deal, the two companies will also build 3 GW of solar equipment manufacturing capacities in the country (Adani 2 GW and Azure 1 GW).

The winners of the February auctions for 1.2 GW were SoftBank Group’s SB Energy, Canadian energy firm AMP Energy’s India unit, New York-based Eden Renewables’ Indian arm and ReNew Power. In the June auction for 2 GW — where the all-time low tariff of `2.36 per unit was discovered — the winners were Spanish firm Solarpack’s Indian arm, Avikiran Surya (backed by Italian utility Enel), Eden Renewables, a subsidiary of Germany’s Ib Vogt, UK’s CDC-backed Ayana Renewable, Amp Energy Green and ReNew Power.

As FE recently reported, several adversities, including reluctance of discoms to sign power supply agreements (PSAs) with solar projects, are threatening to disrupt the country’s solar-power progress. Around 6 GW of standalone renewable power projects, won by various players after quoting the lowest rates in reverse auctions conducted by Seci, are staring at an uncertain future as the agency has not yet found buyers for electricity from these solar/wind power generation units. Another 1.7 GW projects have sought to terminate their power purchase agreements, frustrated by delays caused by other parties. While a section of the industry has blamed discoms for not signing PSAs in the hope of better deals in the future, experts have also pointed out that Seci has conducted many auctions without assessing the states’ appetite for such unreliable and intermittent sources of power.