Wind Energy News
Wednesday, 31 January 2018 17:06

Wind energy companies, Andhra Pradesh discoms clash over discount

Rate this item
(0 votes)

31/01/2018

Wind developers are up in arms against Andhra Pradesh discoms for insisting on an arbitrary discount, appropriating a specific benefit the Centre grants renewable energy developers, verbally harping on renegotiating power purchase agreements and threatening not to pay for any excess power provided above an agreed threshold.

"They are compulsorily deducting 2% of the tariff, which is 10 paise per unit of power," said Sunil Jain, President, Wind Independent Power Producers Association (Wippa). "The power purchase agreements (PPAs) we had signed had said that discoms were entitled to 2% discount if they made payment within a week of the power purchase. In fact, payments are made six months late, but for the last two to three months, they have begun deducting the discount anyway. In fact, the PPAs say the discoms should pay a penalty of 2% if payment is delayed beyond two months. Far from paying the penalty, they are enforcing the discount."

The Ministry of New and Renewable Energy (MNRE) provides a subsidy of 50 paise per unit of power produced to renewable energy developers under its Generation Based Incentive (GBI) scheme. "They are deducting the entire GBI discount while making payments," said Jain. "This is over and above the 2% discount. This has been going on for the past eight months. There was nothing in the PPA to this effect."

He also alleged that wind developers were being verbally asked to renegotiate their PPAs at a lower tariff. "They have not put anything in writing yet, but officials keep bringing it up," he said. There was also the issue of excess power produced. "They are threatening not to pay for the additional power if the wind project's plant load factor (PLF) goes above 23%," he said. "Ours are not thermal plants. Some days, depending on the wind speed, we may even get a PLF of 30%. Indeed, turbines with new technology enable PLFs of 30% or more, but the cost of setting up the project is also higher. We are basically being told to underutilise our turbines."

"I'm aware of the issues we are having with wind developers," said Ajay Jain, Principal Secretary in the state's power ministry and Chairman, Andhra Pradesh Generation Co (Apgenco). "We are holding a meeting with leading developers on Wednesday (January 31). A middle ground has to be found." He, however, declined to comment on the specific issues.

The problem relates to 2185 MW of wind projects commissioned by the state in 2016-17, amounting to a total investment of Rs 15,000-16,000 crore. That year Andhra Pradesh added the maximum capacity of wind power among wind energy producing states. At the time, wind tariffs used to be set by the power regulators of these states, and the Andhra Pradesh Electricity Regulatory Commission (Aperc) had decided on a tariff of Rs 4.80 per unit.

In 2017, Solar Corporation of India (SECI), an arm of the Ministry of New and Renewable Energy (MNRE) conducted the first wind auctions in India in February and October, which saw the lowest winning tariff drop dramatically to Rs 3.46 per unit in the first auction and Rs 2.64 per unit in the second. This has led to all discoms buying wind energy feeling that they had been paying too much for wind power so far, and explains why Andhra Pradesh is seeking to reduce the tariff agreed upon in already signed PPAs in different ways.

"Every March, as the financial year ends, banks examine their loan agreements," said Jain. "They may well tell us that since the GBI we expected is not coming, plus a forcible discount of 2% is being taken by the discoms, our projects are unviable. All this investment runs the risk of turning into NPAs."

Additional Info

  • News Section: Wind Energy News
  • Month: January
  • Year: 2018

Subscribe Premium

vertical3a

praash