The Centre has asked state governments to extend the time duration for the completion of older solar projects if the delay is because of their own actions. This comes at a time when states like Uttar Pradesh and Jharkhand are planning to scrap older solar projects or are asking companies to lessen the tariff at which these older projects were signed.
“It is also to be clarified that if in a project, equipment/materials have been purchased ordered and substantial advances paid as per original completion date, and there is a delay on part of the state organisations regarding land, transmission or any such reasons, the extension of project may be allowed,” Dilip Nigam, adviser (National Solar Mission), Ministry of New and Renewable Energy, told the principal secretaries (power/energy) of each state government through a letter dated July 28, 2017.
Nigam added that if there are “any delays of any kind on the part of the state government authorities or public sector units like land allotment, transmission/evacuation facilities, connectivity permission or force majeure, the competent authority in the state/SECL (Solar Energy Corporation Limited)/ NTPC, etc, may consider providing extension of the time duration strictly as per the contractual agreement”.
Various state governments like Uttar Pradesh and Jharkhand — which have auctioned many solar projects at a high tariff in last three years — are planning to cancel those projects or asking the companies to match the current tariffs that are extremely low, government sources said.
The current low tariffs in solar projects are pushing the state governments to rethink the status of all older solar projects. For example, in December 2015, Uttar Pradesh signed various solar projects of total 215 MW capacity with the tariffs ranging between 7.02 per KWH and Rs 8.60 per KWH, while in May this year, a 200 MW solar park was auctioned in Rajasthan at a price of 2.44 KWH.
Last month, the Uttar Pradesh government asked solar companies to renegotiate power prices. On July 25, it cancelled the power purchase agreements (PPAs) with six such solar companies — which had signed those PPAs in December, 2015 at a price between 7.02 per KWH and Rs 8.60 per KWH — stating that they were incurring delays in setting up their respective projects.“Developers often benefit from delays as falling equipment prices mean better returns. Ideally, there should be no extensions but it is often seen that states are unable to provide the requisite infrastructure in time and in such a situation it would be unfair to put the onus on developers. The solution to this problem is that states should prepare the requisite infrastructure or a
t least showcase their ability to do so in time before calling for a bid. This would result in more competitive bidding as it would reduce developer risk,” Jasmeet Khurana, associate director at solar consultancy Bridge to India, told The Indian Express. While on July 28, Nigam told the state governments to give time to the solar companies to complete their projects if
While on July 28, Nigam told the state governments to give time to the solar companies to complete their projects if delay is because of former’s actions, he had written another letter on July 3, where he asked the former to take “strict action” if there are any delays. Nigam wrote to all state governments on July 3: “As you are aware that solar power tariffs are falling significantly. One of the reasons of falling tariff is lowering of prices of solar cells/modules internationally. Falling prices of solar cells/modules may give undue benefits to project developers at the cost of the government if project duration is extended. In view of this, it is important that already awarded projects are commissioned on time. Therefore, you are requested to ensure that projects are
In view of this, it is important that already awarded projects are commissioned on time. Therefore, you are requested to ensure that projects are comissioned on time as per the contractual agreement and no time extension shall be given to any project. Strict action may please be ensured as per contractual agreements for delays if any.” Meanwhile, state-owned power distribution utilities (discoms) in states such as Rajasthan and Tamil Nadu are reportedly curtailing solar and wind power generation, as well as randomly issuing backing down instructions — asking generators to unplug from the grid. Discoms in Tamil Nadu, Madhya Pradesh, Maharashtra and Rajasthan are also reported to be delaying payments to generators of wind and solar power by 6-12 months, putting the cash flows of most of the smaller renewable firms under severe stress.