States shifting gears to catch up with new green power regime

Financing and evacuation in place now, says government

The setting of stringent renewable purchase obligation (RPO) targets in the revised national tariff policy will push states towards lending back-end support for evacuation and financing of green power.

The NDA government has increased the targets for setting up solar capacity five times to 1,00,000 megawatt (Mw) by 2022.

PLACE IN THE SUN

• The NDA government has increased the targets for setting up solar capacity  five times to 1,00,000 Mw by 2022
• The existing solar RPO fixed by the regulators for the states are in the range of 0.10 per cent to 0.50 per cent of their total power procurement
• The RPO provision has been raised to eight per cent for solar in the revised National Tariff Policy

"This is a big challenge because when the target was revised, the installed capacity of solar power of the country was around 3,744 Mw and this meant an increase of around 96,000 Mw in the next seven years. The RPO is to be revised to match this target," said Tarun Kapoor, joint secretary (solar), ministry of new and renewable energy.

The RPO for solar power set by the regulators for the states is in the range of 0.10-0.50 per cent of their total power procurement. The RPO provision has been increased to eight per cent for solar power in the revised national tariff policy. The states were now working out their plans and awarding projects, said Kapoor, adding the southern states were taking the lead.

Andhra Pradesh, for instance, will need 5,678 Mw of renewable energy capacity in 2022 under the revised RPO. The state has commissioned 573 Mw and tendered 4,096 Mw during 2015-16. The balance 1,009 MW will be tendered this year.

Karnataka will need 6,671 Mw in 2022. It has commissioned 45 Mw and tendered 4,464 Mw in 2015-16. The state is likely to tender 2,062 Mw this year.

As tariffs fall with every tender, the Centre is of the view that sub-Rs 5 per unit tariffs are feasible. "Bidders are coming with low tariffs on their own without any compulsion from the government, which implies these tariffs are workable. Bidders who have offered this tariff have issued bank guarantees and therefore will take up construction work," Kapoor said.

Debunking concerns of large-scale financing, ministry officials said the government was in constant touch with financial institutions to make available the required money. "Private developers are also making efforts to get equity and loan finance. While financing is challenging, it is not true that no fresh equity is flowing in. Had this been the case, 7,000 Mw of renewable capacity would not have been commissioned in 2015-16. Work is going on, and a large number of projects will be commissioned this year," Kapoor pointed out. As states float mega solar power projects, the Centre is trying to match them in evacuation of power. Ministry officials said a large number of sub-stations had spare capacity where new projects could immediately be connected. "For the long run, solar parks with connectivity are being developed. Also the green corridor projects have taken off and transmission lines are under construction in Tamil Nadu and Rajasthan," Kapoor said.

Business Standard had reported last month the second phase of the green corridor to connect 33 upcoming solar power parks was likely to be awarded through tariff-based competitive bidding during this year. The first phase is being built by state-owned Power Grid Corporation.