After Andhra, now Punjab wants to rework clean energy contracts
The office of Punjab State Power Corporation in Jalandhar, which had sought a discount from solar power developers
Canadian pension fund Caisse de dépôt et placement du Québec (CDPQ)-backed Azure Power Global Ltd is among developers that the Punjab government led by chief minister Amarinder Singh wants to renegotiate clean energy contracts with, said two people aware of the development.
Starting 1 July, Punjab State Power Corporation Ltd (PSPCL) has sought a discount from solar power developers because of low interest rates and a financial crunch exacerbated by the pandemic, Mint reported on Monday.
An Azure Power spokesperson declined comment.
Punjab’s move comes on the heels of a widely criticized attempt by the Andhra Pradesh government led by chief minister Y.S. Jagan Mohan Reddy to renegotiate clean energy tariffs.
It also comes against the backdrop of New Delhi aiming to set up an Electricity Contract Enforcement Authority to enforce power purchase agreements (PPAs) through draft amendments to the Electricity Act, 2003.
“We have written to big solar power developers, including Azure Power, which supply electricity to the state,” said a senior state government official, one of the two people mentioned above, requesting anonymity.
PSPCL has also sought a 10% tariff discount from Prayatna Developers Pvt. Ltd (PDPL), a subsidiary of Adani Green Energy Ltd, promoted by billionaire Gautam Adani.
A 29 June letter to PDPL reviewed by Mint, PSPCL said, “The energy rate payable as per the subject cited PPA was determined based upon tariff determined by CERC (Central Electricity Regulatory Commission)/PSERC (Punjab State Electricity Regulatory Commission). While determining energy tariff, CERC/PSERC had considered interest rate on loan capital/working capital as 13% to 13.50%, whereas these interest rats have reduced considerably over the period,” it said.
Revisiting PPAs could hurt India’s ability to attract investments and the perception about the sanctity of legal contracts. Also, mounting dues to generators threatens to dent India’s image as a clean energy champion.
“Besides, the solar energy tariff has significantly come down to about ₹2.55/- per kWh (kilowatt-hour) as compared to the tariff of ₹5.80 and ₹5.95 per kWh being paid to your generating company,” the communication to PDPL said.
The development also assumes importance given the rapid pace of clean energy capacity addition by India. Clean energy projects now account for more than a fifth of India’s installed power generation capacity.
India has 34.6 gigawatts (GW) of solar power, with an aim to have 100GW of solar capacity by 2022.
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First Published:7 Jul 2020, 05:47 AM IST
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