Other Renewable Energy
Thursday, 18 January 2018 17:15

Renewable power companies compete with thermal plants in spot market

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18/01/2018

Renewable energy has quietly crossed a major landmark as it has started competing directly with thermally generated electricity in the spot market, intensifying competition in the sector.

ReNew Power has become the first renewable power company to compete with coal-based plants in the spot market as it has received better tariffs than those discovered in the auction process.

While this is a major milestone, the renewables sector is not likely to see companies setting up solar or wind power plants purely for sale on the power exchange, experts said.

ReNew Clean Energy Pvt Ltd, a project developed by ReNew Power with installed capacity of 51 MW at Rajgarh district of Madhya Pradesh, has been selling solar power in day-ahead market of the India Energy Exchange (IEX), said Rajesh K Mediratta, director for business development at IEX. ReNew Power declined comment on the development.

The plant has realised an average price of Rs 3.80 per unit from the exchange. Though the net realisation to the company will be lower after considering transmission charges and deviation charges, the tariff is still higher than the prices discovered through auctions. Solar tariffs discovered through auctions have touched a record low of Rs 2.44 per unit in May last year and range between Rs 2.50 and Rs 3.50 per unit.

Though merchant solar plants selling power through day-ahead market are eligible to receive renewable energy certificates (RECs), which entitle them to receive an additional minimum Rs 1 per unit, industry experts said renewable energy companies are not keen on setting up plants exclusively for short-term trade.

Bridge To India managing director Vinay Rustagi described the case of ReNew Power as an exception. "It is unlikely that renewable power companies will invest significant capex in setting up merchant plants without PPAs (power purchase agreements) because of demandside uncertainties. There seems to be surplus power availability and power is trading on the exchanges at Rs 3.00-3.50 levels. Banks are also unlikely to lend to such projects. The uncertain generation from these projects also makes it difficult to trade renewable power on exchanges," he said.

However, Mediratta said renewable energy generators have an immense opportunity to consider commercial ways to sell solar energy through exchange at competitively delivered market prices, beyond the conventional PPA and REC framework.

"This precedence set by Re-New Power indeed indicates the enormous potential and opportunity for renewable energy generators to sell through exchange at competitively discovered market prices," Mediratta said.

Additional Info

  • News Section: Other Renewable Energy
  • Month: January
  • Year: 2018
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