3 developers call off NTPC’s solar contracts  over regulatory delays

These firms had participated in what was the first interstate transmission system (ISTS)-connected solar auction conducted by NTPC, India’s largest power generation utility, for building power plants and supplying 2,000MW in August 2018. These bids contributed toward lowering India’s solar power tariff trajectory. While Acme Solar Holdings, Shapoorji Pallonji Infrastructure Capital Co. Ltd and New York Stock Exchange-listed Azure Power Global Ltd bid ₹2.59 per kilo-watt hour (kWh) to win contracts to build plants of 600MW, 500MW and 300MW each, respectively, SoftBank-owned SB Energy bid ₹2.60 per kWh at which it will sell solar power, to win contracts to develop 600MW.

The terms of the PPAs allowed the developers to opt for their termination in case of delays.

“The PPAs of Acme Solar, Azure Power and Shapoorji Pallonji group have been terminated with only SB Energy’s remaining," said a person aware of the development requesting anonymity.

This comes against the backdrop of termination of wind PPAs of Hero Future Energies, ReNew Power Ventures and Mytrah Energy with NTPC Ltd to supply 300MW each.

“Only PPAs of Actis Llp’s renewable energy platform Sprng Energy and Continuum Wind Energy Pte Ltd remain to supply 200MW and 50MW, respectively," said the person quoted above.

India, the world’s third-largest energy consumer after the US and China, is running what will become the world’s largest clean energy programme with an aim of having 175 gigawatts (GW) of clean energy capacity by 2022 as part of its global climate change commitments. It plans to add 100GW of solar capacity by 2022, including 40GW from rooftop projects. Wind power projects are to contribute 60GW. India currently has an installed renewable energy capacity of around 84.39GW. An NTPC spokesperson in an emailed response confirmed the development and said, “Under the provisions of power purchase agreement (PPA) signed by solar power developers (SPDs) and wind power developers (WPDs) with NTPC, it was required that discoms buying above power would obtain approval from the regulatory commission(s) within a period of two months from the date of signing of agreement. In the event of delay in regulatory approval SPDs- WPDs/discoms can terminate the agreement without any financial liability to either party." “Due to delay of more than two months in regulatory approval in the above cases, some of the SPDs/WPDs have opted for termination of PPAs under the PPA provisions," the spokesperson added.

India is seeking additional clean energy investments of around $80 billion till 2022, growing more than threefold to $250 billion in 2023-30. India also has an ambitious aim to set up 500GW of renewable energy capacity by 2030 in what could potentially reshape global energy market dynamics.

While queries emailed to a Shapoorji Pallonji group spokesperson remained unanswered, spokespersons of Azure Power and Acme Solar confirmed the development.

“The two-month deadline for obtaining the required approvals had lapsed; hence, PPA stands terminated," said an Azure Power spokesperson in an emailed response. “The PPA got auto-terminated as per provisions of PPA due to failure of NTPC to receive approval from respective State Electricity Regulatory Commission (SERC) for adoption of tariff, trading margin and contracted capacity within specified time frame. As per provisions of PPA and PSA (power supply agreement), both the agreements stand cancelled and terminated with no liability to each party," added an Acme Power spokesperson in an emailed response.

These developers are backed by marque global investors. German development finance institution Deutsche Investitions- und Entwicklungsgesellschaft (DEG), World Bank’s private-sector development arm International Finance Corporation (IFC) and Canadian pension fund CDPQ are invested in Azure Power; and Abu Dhabi Future Energy Co. (Masdar) has invested in Hero Future Energies. Goldman Sachs, Asian Development Bank, Abu Dhabi Investment Authority, Canada Pension Plan Investment Board, Global Environment Fund and Japan’s JERA Co. Inc. have invested in ReNew Power Ventures.