Renewable energy projects of 40 GW fail to find buyers for green power

A senior official said, pausing more tenders was "seriously considered" till pending PPA/PSAs are signed, but no final decision was taken

Close to 40 gigawatts (Gw) of renewable energy (RE) projects tendered by four Renewable Energy Imple­mentation Agencies (REIAs) designated by the Ministry of New and Renewable Energy  (MNRE) have failed to find buyers for their green power.

  These projects, awarded by RE tendering nodal agency SECI and state-run power generators NTPC, NHPC, and SJVN, are pending for more than a year as no state has come forward to sign power sale agreements (PSAs), according to a presentation at an MNRE review meeting on February 5. Bidding guidelines stipulate that a ‘letter of allocation’ (LoA) should be awarded 180 days of the tender announcement.  

The meeting, chaired by Union Minister for MNRE Pralhad Joshi, addressed key issues in India’s RE sector. According to data shared by ministry officials, of the 94 Gw of RE project bids issued by the four REIAs in 2023-24, those of only 45 Gw have received an LoA. An LoA is issued after a project signs a PSA with a state to buy power, followed by a power  purchase agreement (PPA) with the respective REIA.

 

A senior official said pausing new tenders was “seriously considered” until the pending PPAs/PSAs are signed, but no final decision was taken.

 

Business Standard has reviewed a copy of the presentation and data sets shared during the meeting. An email questionnaire sent to the MNRE spokesperson regarding the meeting’s outcome remained unanswered until the time of going to press.

 

SECI was the first REIA appointed by the MNRE in 2011 to tender RE projects, including solar, wind, hybrid, FDRE, and battery storage. In recent years, NTPC, NHPC, and SJVN were also appointed as RE tendering agencies. The REIAs are responsible for tendering RE capacity, finding buyers for the projects, and facilitating the sale and purchase of RE power while earning a trading margin.

 

Among the four, SECI and NTPC have the highest number of RE bids — 12 Gw each — awaiting PPAs or PSAs. NHPC and SJVN each have 8 Gw of pending RE projects. 

 

Emailed questions to the spokespersons of the three companies did not receive a response until the time of publication.

 

During the review meeting, stakeholders and officials pointed at a lack of demand from states as the key reason for the delays. “Most states show reluctance as by the time they agree to sign a PSA, the tariff of a RE project in another tender has gone down. So they compare the prices and refuse to sign at higher tariff. Then there is delay in getting regulatory approvals in states,” said an official.

 

The delay in finalising tenders is now impacting investments in the RE sector. Recently, the Central Electricity Regulatory Commission (CERC), the quasi-judicial apex regulator for the sector, rejected the tariff discovered in SECI’s first-ever grid-scale battery energy storage system (BESS) tender from 2022.

 

CERC cited “delays in signing PSAs and PPAs” and the reduction in BESS prices over the past two years as reasons for rejecting the tariff.

 

The delay in signing PSAs and PPAs for SECI-awarded projects is already at the centre of the controversy involving the Adani group’s alleged bribery case, which is currently under investigation in the US. This first-of-its-kind tender was aimed to build a solar manufacturing unit along with a power plant and Adani Green and Azure Power were the only two winners.

 

However, when SECI was unable to find buyers for these projects, the two companies allegedly approached multiple states and offered bribes to secure PSAs, according to the indictment by the United States Attorney for the Eastern District of New York. Andhra Pradesh was one such state that agreed to purchase power from the project at Rs 2.49 per unit after persuasion from the companies, according to the indictment document.