BENGALURU: Rejecting the requests of both wind developers and the ministry of new and renewable energy (MNRE), Karnataka’s power regulator has reiterated its earlier decision that power purchase agreements (PPAs), which had not been approved before it set a new wind power tariff, would be okayed only at the new rate.
The Karnataka Electricity Regulatory Commission (KERC) had passed an order on September 4, setting a fresh feed-in tariff for wind power at Rs 3.74 per kWh, considerably lower than the tariff of Rs 4.50 per kWh, set by it in October 2015, which had prevailed till then.(See ET, September 11.) This was in response to the wind auctions held elsewhere earlier this year, which saw the winning tariff plunge to a low of Rs 3.42 per kWh.
The order, however, put into jeopardy 599 MW of wind capacity whose developers had already signed PPAs with various discoms in Karnataka at the old rate of Rs 4.50 per kWh, but the PPAs had still to be ratified by KERC. Around 273 MW had already been commissioned and were supplying power to the state discoms at Rs 4.50 per kWh, but following the new order, would have to renegotiate their PPAs at Rs 3.74 per kWh. The remaining 326 MW are still under construction.
Even before KERC passed its new tariff order, on August 21, Bhanu Pratap Yadav, MNRE joint secretary, had written to the principal secretaries (power) of the seven main wind energy producing states, including Karnataka, that PPAs already signed should be honoured.
“It has come to the notice of the MNRE that some SERCs are not according consent for wind power projects, which were commissioned before March 31, and for which PPAs have already been signed,” the letter said. “This creates an atmosphere of uncertainty in the wind power sector and going back on contractual documents like PPAs may not be appropriate.” (See ET,August 23.)
Of the 273 MW of wind power in Karnataka, which have already been commissioned but have PPAs awaiting approval, PPAs for 242.50 MW were signed before March 31this year.
Despite this the KERC order setting the new tariff at Rs 3.74 per kwh stated plainly that “the tariff determined in this order shall also be applicable for the projects which entered into PPAs with any discom prior to the date of this order that are not approved by the Commission, if they so opt”.
In its letter of October 10 to the Additional Secretary of the Karnataka government, the KERC has repeated that its previous order stands in its entirety. “The Commission notes that the request of the government of Karnataka is based on the advice of MNRE that the government should not go back on contractual obligations in respect of signed PPAs of wind projects that have been commissioned before March 31, 2017,” it says.
“The issue of going back on such contractual obligation had been already raised by the stakeholders, and the Commission considered and rejected such pleas during the course of passing the order.”
“What is happening in Karnataka could potentially lead to NPAs for banks,” said Sunil Jain, President, Wind Independent Power Producers Association (WIPPA). “Such actions are detrimental to potential investments in this sector and will lead to job losses.”