Bring policy paper fast to deal with discoms” reluctance to ink long term PPAs with RE developers: Par panel

New Delhi: A Parliamentary panel on Friday asked the power ministry to expedite a policy paper to provide a remedy for the issue of falling renewable energy tariffs which have prompted reluctance among discoms to enter into long term power purchase agreements (PPAs) with project developers, saying it “has become a conundrum”.

The Parliamentary Standing Committee on Energy was apprised that the power ministry is looking for a possible solution to this problem and will come out with a policy paper in this regard.

“The Committee expect that the Ministry would expeditiously finalize the Policy Paper,” the Parliamentary panel said in its report 16th report on Ministry of Power tabled in Parliament on Friday.

“The issue of long term Power Purchase Agreement (PPA) has become a conundrum. Since the advent of Solar Power, its tariff is on a constant decline,” it added.

It found that in the recent years, solar power tariff has been quoted aggressively, making the Discoms reluctant to enter into any long-term PPA.

“This situation is causing disruption as long term PPA is a pre-requisite for financing of any new power project. In absence of long term PPAs it may be difficult to attract investment in Power Sector,” it said.

“On one hand, there are Power Generators who insist on honoring of long term PPAs at any cost as they have made huge investment in their projects.

On the other hand, there are Discoms who do not want to purchase power at higher rate through long term PPAs as it is available at much cheaper rate in short term market,” the report added

The panel recommended to the Ministry of Power to make a provision for review of such PPAs wherein tariff has been increased owing to cost overrun due to delay in development of a power project.

The panel in its 17th report on the Ministry of New and Renewable Energy (MNRE), tabled in Parliament on Friday, said, “Ministry (MNRE) should work on a mission mode so that the target of 175 GW is successfully achieved by the year 2022.”

As much as 175 GW of renewable energy capacity is to be installed by 2022, which includes 100 GW from solar, 60 GW from wind, 10 GW from biomass and the remaining 5 GW from small hydro power.

The panel noted that the total installed capacity of renewable energy as on January 1, 2021 is 92.54 GW, which comprises 38.79 GW from solar power, 38.68 GW wind power, 10.31 GW bio power and 4.76 GW small hydro power.

It found that “only little more than 50 percent of the target have been achieved and the remaining 82.46 GW capacity have to be installed in just one and a half year.”

Besides, it noted that an additional capacity of 49.30 GW is under implementation and another 27.57 GW has been tendered.

“Even if these capacities are installed, the cumulative capacity will be 169.41 GW which is still short of the target of 175 GW. In such a situation, the Committee are apprehensive that any laxity on the part of the Ministry in achieving the assigned target may amount to reneging on our commitment,” it said.

India has made a pledge that by 2030, 40 per cent of its installed power generation capacity shall be from clean energy sources.

It also stated that “after more than 10 years of the launch of National Solar Mission in the year 2010 and subsequent more laudable declaration in the year 2015 of the target of 100 GW solar energy (by 2022).

the Government has been able to install only 38.79 GW of solar energy in the country upto 31st January, 2021.”

While the MNRE has stated that solar power projects of 36.03 GW are under various stages of implementation and 23.87GW are in tendering process, the real test lies in their actual commissioning within the scheduled time frame, it pointed out.

India has set a target to install 40 GW of solar power by setting up over 50 solar parks and ultra mega solar power projects by 2022.

The panel found that against this target, 39 solar parks of aggregate capacity of 22,879 MW have been approved to be setup in 17 states.

Out of these approved solar parks, infrastructure in eight parks is almost fully developed where solar projects of aggregate capacity of 6,580 MW have also been commissioned.

Four solar parks are partially developed where solar projects of aggregate capacity of 1,365 MW have been commissioned.

It noted that the remaining 11 solar parks of aggregate capacity of 17,121 MW have not even got the approval of the MNRE, though these parks have to be developed and projects therein commissioned by 2022.

Further, it pointed out that only 20 per cent of the approved solar parks are fully developed so far and another 10 per cent are only partially developed, leaving as much as 70 per cent unachieved.

Source: PTI