Economic Survey 2018: Need to revisit current solar, wind subsidies

With prices falling at such a fast pace, financially beleaguered state-owned power distribution companies are reneging on contracts they had signed at higher tariffs

As tariffs tumble to record lows in both solar and wind power, there is also increasing concern of states going back on power purchase agreements (PPAs) signed at higher rates. Economic Survey 2018 has highlighted the need to revisit the current subsidy and incentive mechanism to avoid cases of PPA renegotiation. 

"The discovery of very low tariffs through the auctioning process, though a welcome news, possibly contributed to some demands for renegotiation of the already signed PPAs. Some discoms have hinted at the possibility of renegotiating the PPAs signed by them at tariffs higher than those in the recent bids,"