NTPC Chairman Recommends Setting up of RE Projects Without PPAs

Amidst a row between discoms and clean energy developers over the renegotiation of the tariff, NTPC Chairman and Managing Director Gurdeep Singh has recommended setting up of renewable projects without power purchase agreements (PPAs). In the present scenario, bankers and financial institutions vow on long-term PPAs before financial closure or fund tie-up of a project.

Partaking in a panel discussion, Singh said buyers can either purchasing power on capacity contracts (PPAs) or from the market. “There could be long-term contracts but energy can be purchased on a day-to-day basis or monthly basis.”

About viability of this idea, he said, “10 years back, no one was believing the solar energy prices will come down. Let’s not underestimate the power of the development of technology, Solar cells would be more efficient and there is offshore wind power.”

Lately, during the PPA battle in Andhra Pradesh, the state’s Discom had asked the Solar Energy Corporation of India (SECI), to decrease the tariff for the 400MW supply to Rs 2.44 per unit from Rs 4.5 fixed earlier.

In its reply, the nodal agency had refused to lower tariffs for 400 MW electricity supplied from a solar park at Galiveedu Mandal in district Kadapa to Andhra Pradesh South Power Distribution Company Ltd (APSPDCL). In its letter, SECI stated that the tariff of Rs 4.5 was fixed after competitive bidding as per provisions of the Electricity Act. It said the tariff of Rs 2.44 per unit was arrived at in a separate auction for a solar project in different circumstances.

There have been occurrences where states vowed for renegotiating tariffs even after the conclusion of the PPAs, as clean energy prices have dropped sharply during the past few years, the prime example of it is the latest decision by the Andhra Pradesh government to renegotiate all the wind and solar PPAs signed in the previous regime.