The Centre is set to come up with rules to pool solar tariffs and is also aiming to increase bundling of renewable energy (RE) in existing thermal Power Purchase Agreements (PPAs) to boost the procurement of green energy, Power Secretary Alok Kumar told The Indian Express. The government is aiming to boost installed RE capacity to 500 GW by 2030.

“The intention is to have a pool, in which various procurements that are done over a year, two or three years, their tariffs are pooled so that there is no problem that (some tariffs are) 5 paise lower or 5 paise higher,” Kumar said on the issue of discoms (power distribution companies) waiting for solar tariffs to fall further before entering procurement agreements. He added the Power Ministry was working with the MNRE and would release rules to address the issue.

Solar tariffs have fallen consistently over the past decade to a low of under Rs 2 per unit (1 unit = 1 kWh) in December 2020 due to the falling price of solar panels and lower financing cost. The trend of lower solar tariffs has led to many players waiting on tariffs to fall further instead of entering into long-term PPAs.

“ Solar tariffs have fallen to as low as 3 cents or less than Rs 2.5 per kWh (kilowatt-hour) because solar panel prices have been falling for a very long time,” said Debasish Mishra, partner and leader at Deloitte India, adding solar tariffs had recently begun to stagnate or fluctuate. Mishra said SECI (Solar Energy Corporation of India Ltd) was “often finding it difficult to find buyers at discovered prices because discoms expect the tariffs will continue to fall even further and many of them have already met renewable purchase obligations.”

Mishra said a move to pool tariffs could help speed up procurement of solar power by addressing concerns, among discoms, of losing out on lower solar tariffs in the future.

Kumar noted that the government intended that about 10,000 MW of RE-based power be bundled with fossil fuel-based power over the next 4-5 years, and this would help lower the total cost of power procurement for certain discoms. Mishra said a move to bundle cheaper renewable energy under these deals would help discoms lower their average cost of power procurement.

Source: The Indian Express