CERC's green power rate norms hurt Gujarat's solar power plans

The new rate charge norms for ‘green’ energy, announced by the Central Electricity Regulatory Commission (CERC) in September, are likely to delay the Gujarat government’s plans for solar power capacity addition.

The state had launched its Solar Power Policy, aimed at setting up solar power plants of up to 500 Mw capacity. Not a single power purchase agreement (PPA) has been signed so far.

Since January this year, when the state government launched its solar power policy, over 700 Mw of solar power generation capacity has been allocated to 34 national and international project developers in the state. Setting up this capacity for solar power generation by developers would require an estimated investment in excess of Rs 80,000 crore.

“Quite a good number of companies have been assigned capacities by us and they have even identified land for setting up the plants. But we have not been able to sign a single PPA with the developers because of the liberal guidelines announced by the Commission,” said a senior official from Gujarat Urja Vikas Nigam Ltd (GUVNL), the holding company of the state government which carries out sale and purchase of electricity in the state.

The new regulations allow project-specific rates for solar power projects as it is a “comparatively evolving technology”. The normative capital cost for setting up a solar photo voltaic power plant has been set at Rs 17 crore per Mw; for solar thermal projects, it is Rs 13 crore per Mw. The CERC has allowed a relaxation on a project-to-project basis; solar power generators can apply for a higher rate, which if okayed will have to be paid by distributors.

GUVNL, the distributor in this case, doesn’t wish to sign a purchase agreement at any higher rate than the set one at which it buys from other suppliers. The GUVNL executive said these PPAs could have taken shape by now if the Commission had not come up with these “investor-friendly” guidelines. “Though we hoped to sign some PPAs, it would be delayed,” he added.

The regulator had announced the new green energy rate norms, to lay down guidelines for pricing power from non-conventional sources and promote generation of electricity from such sources in the country, as mandated by the National Tariff Policy.

While the commission had held detailed discussions with the stakeholders before finalising the new norms, the official complained that GUVNL’s suggestions were not taken on board. “Our contentions have not been considered favourably,” he said.

Denying allegation of the rate regulations being skewed a senior official from the CERC said, “We have to take a balanced view of the arguments from all the stakeholders.”