MNRE Denies RE Projects Failing To Secure PPAs

MNRE Denies RE Projects Failing To Secure PPAs

The Ministry of New and Renewable Energy (MNRE) claimed that renewable energy projects in the country are not failing to secure Power Purchase Agreements (PPAs). Shripad Yesso Naik, Minister of State (MoS) for New and Renewable Energy, addressed the issue of unsold renewable energy in a written statement before the Parliament. This follows reports that over 9 GW of allocated projects with SECI are yet to find buyers.

The minister said no utility-scale renewable energy projects commissioned under the bids issued by the Renewable Energy Implementing Agencies (REIAs) have unsold power.

“There is no such utility-scale renewable power generation capacity which has been commissioned under the renewable power procurement bids issued by Renewable Energy Implementing Agencies (REIAs) of the Ministry of New & Renewable Energy (MNRE), namely Solar Energy Corporation of India Limited (SECI), NTPC Limited (NTPC), NHPC Limited (NHPC) and SJVN Limited (SJVN), that remains unsold,” the minister said.

Explaining the process, the minister explained, “The process involves issuance of Letters of Award by REIAs after selection of successful bidders through transparent competitive bidding, followed by the signing of Power Sale Agreements (PSAs) between REIAs, acting as intermediary procurers and State Electricity Distribution Companies (DISCOMs), acting as end procurers. Thereafter, Power Purchase Agreements (PPAs) are signed between REIAs and renewable power generators selected through bidding. Once PSAs and PPAs are signed, then the development of the renewable power project starts and after the commissioning of the project, the power generated therefrom is immediately sold as per the signed PSAs and PPAs.”

Unsigned renewable PPAs

He, however, also talked about the issue of unsigned PPAs. He said that it was mainly due to the rise in the bidding quantity of renewable power. “The quantum of unsigned PSAs / PPAs is primarily on account of a significant rise in the quantity of renewable power that has been bidded out in the recent past. PSAs and PPAs are being signed and REIAs have signed PSAs of around 15 GW in respect of renewable energy procurement bids issued by REIAs in FY 2023-24,” he added. 

He said that the signing of PPAs and PSAs is contingent upon several developments which include-time taken by the electricity regulatory commissions for the adoption of the tariffs discovered through transparent competitive bidding. He said that it also includes time taken by the state power regulatory commissions for the approval. Besides these, the time taken by discoms to obtain requisite internal/state government approvals is also one of them.

Background

This comes in the backdrop of recent data from the Solar Energy Corporation of India (SECI) which talked about several tendered projects that failed to get enough parties to sign PPAs, making these projects no off-takers. SECI, earlier had also talked about its role in the whole tendering process of renewable energy projects.

SECI had said that the involvement of the body bolsters the confidence of financiers in financing such projects. It also said that it aids in the smooth commissioning of the project by monitoring of these projects and giving its hand-holding support when needed.

The fiasco linked to the manufacturing linked tenders awarded to Adani and Azure power that have led to US investigations was also linked to the inability of SECI to find takers at the winning price of Rs 2.93. In fact, the Economic Times has reported that there is a rethink in SECI following the issue to issue tenders only after firm demand from specific state discoms is in place. If that does happen, it is likely to lead to a slowdown in tendering for sure in 2025, after a hectic 2024.