Azure Power Signs PPA’s For 600 MW With SECI For Its 4 GW Mfg. Linked Projects

Azure Power today announced that it has signed Power Purchase Agreements (PPAs) for 600 MW ISTS connected solar power projects with Solar Energy Corporation of India (SECI), under its 4 GW manufacturing linked projects, which will supply power for 25 years at a fixed tariff of INR 2.54 (~US 3.4 cents) per kWh. The projects will be constructed in Rajasthan, the highest solar insolation state in India, for which connectivity approval is in place and land is fully identified and is under acquisition. The commissioning timeline for the projects as per the agreement is Q3 FY 2024.

Speaking on this occasion, Ranjit Gupta, MD and CEO, Azure Power said, “Continuing on our communication regarding our progress with SECI on the 4 GW manufacturing linked projects, we are happy to announce the signing of our first PPAs for 600 MW capacity. This is a significant milestone, given the long wait. With things now falling into place, we are on our way to see our 4 GW pipeline turn into contracted capacity and help us realise significant value accretion for our stakeholders. We understand SECI is progressing to tie up Power Sale Agreements for further capacity in the tender and we expect to sign PPAs when the corresponding PSAs are in place. We remain committed to our policy to only take on contracts that create shareholder value and earn returns above our cost of capital”

The signings have been much awaited, ever since the tender results, announced in November 2019, and final LOA to Azure in December and January 2020 were issued. Adani Green Energy was the other winner, with 8 GW allotment under the tender. As SECI ties up more and more PSA’s, both the firms will get their respective PPA’s on a proportionate basis. The PSA signing between SECI and various state discoms has been stuck on the issue of pricing, with many discoms balking at the relatively high price of upto Rs 2.92/unit till now.

What has changed in the past few months is the increasing bid rates being seen in fresh tenders, as well as a willingness among the manufacturing winners to compromise a little on the costs, in the planning that higher efficiency modules, lower interest rates and better overall management will help them limit damage to project returns to the minimal at the lower signed final costs.

It is understood that Azure has a tie-up with Waaree Energies for the manufacturing component of the deal, at increments of 500 MW each possibly.