Punjab govt wants to renegotiate solar power tariffs

Punjab is the latest state to seek a revision of its solar power tariffs with chief minister Amarinder Singh’s government calling for a tariff of 4.50 per unit, said two people aware of the development, requesting anonymity.

The state government has cited fall in prices of solar panels as well as lower borrowing costs and reduced corporate taxes behind the proposed step. Punjab’s decision is expected to compound the woes of clean energy sector which is in the midst of a logjam over contracts with Gujarat and Andhra Pradesh, and inordinate payment delays by states such as Telangana.

A communication issued on Tuesday by the Punjab State Power Corp. Ltd (PSPCL) reviewed by Mint said: “RE (renewable energy) power rates need to be brought down to the level of average pooled cost of power @ 4.50 per unit worked out by PSERC (Punjab State Electricity Regulatory Commission) for 2020-21. As such, it is requested to reduce the tariff rate by at least 15%.” PSPCL is tasked with supplying and generating power in Punjab.

Queries emailed to PSPCL officials late on Tuesday were not responded till press time.

Revisiting power purchase agreements (PPAs) could hurt perception about the sanctity of legal contracts in India that is running the world’s largest green energy programme. Also, mounting dues to generators threatens to dent the country’s image as a clean energy champion.

“Changing goal posts after the PPAs have been inked will impact investor confidence,” said the head of a large Indian clean energy firm and one of the two people cited above.

About 4.7 trillion has been invested in India’s renewable energy space in the last six years, with an expected 1 trillion investment opportunity a year till 2030.

“As you are aware, due to the restrictions imposed by Government on movement of persons and working of the commercial establishments to control the spread of the Covid-19 pandemic, the economic activities have been severely affected all over India. These restrictions have directly affected the overall business activities including but not limited to reduction in demand of the electricity and ability of consumers to pay their electricity dues. This has led to severe cash deficit for the PSPCL,” according to the communication by PSPCL.

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