The industry body wrote that the state’s new bill to redefine solar tariffs will make projects already in operation unsustainable and power producers will struggle to repay their loans. He requested the intervention of the Minister of Justice to convey his concerns to the president with whom the bill is currently awaiting approval.

The industry body National Solar Energy Federation of India has approached Justice and Justice Minister Kiren Rijiju to ask for his intervention to reconsider the Punjab government’s bill that allows termination and renegotiation of tariffs for solar projects current operations.

The Punjab Renewable Energy Security, Reform, Termination and Re-Determination of Power Tariff Bill, 2021 seeks to redefine the tariffs within the framework of the power purchase agreements (PPA) concluded for a total of 983.5 MW of capacity of renewable energy (886 MW solar and 97.5 MW biomass). The bill was introduced and passed in the Punjab State Assembly on November 11. After sending it to the governor, the bill was then sent back to the President of India for final approval.

The Punjab has around 900 MW of solar power projects in operation for an investment of nearly INR 7,000 crore. The return on this investment comes in the form of long-term power purchase agreements with a fixed tariff approved by the Punjab State Electricity Regulatory Commission.

According to the provisions of the bill, “… all clauses having a direct or indirect tariff impact in the agreements will be terminated. In addition, agreements between power producers and the Punjab Corporation, including implementation agreements with the Punjab Energy Development Authority, must be submitted to the Punjab State Electricity Regulatory Commission for a new determination of tariffs and any decision to renegotiate tariffs for projects already in operation. will affect the viability of projects and power producers will find it difficult to repay their loans, suppliers and staff, resulting in a default in their business that will directly or indirectly affect the tariffs in the agreements, after reviewing all relevant cost parameters involved in the production of renewable energy.

To ensure the continuity of electricity supply and the state’s energy security, the Punjab State Electricity Regulatory Commission will also determine a temporary tariff rate that will be applicable until the tariff is over. finally redefined by the regulatory commission.

According to NSEFI, the enactment of the bill will be critical to the interests of all solar energy developers operating in the state of Punjab. This will make projects already in operation unsustainable and power producers will struggle to repay their loans, suppliers and staff, leading to a breach of their contractual obligations. This will cloud the sector with negative investment prospects while impacting the livelihoods of hundreds of people associated with these projects. “

In his letter to the minister, NSEFI Chairman Pranav R. Mehta wrote that the bill contravenes the 2003 Electricity Act, the 2005 National Electricity Policy and the National Tariff Policy. from 2016. In addition, it only covers certain specific projects from among the renewable energy projects in operation; the bill does not provide any basis or justification for such a classification.

Since renewables represent a relatively small share of the Punjab’s energy mix, the impact of purchasing renewable electricity on the overall cost of electricity to the state is negligible.

“The cost of purchasing solar power on the ground is 6.5 INR / kWh compared to the total cost of purchasing electricity of 4.3 INR / kWh. Considering the contribution of solar energy in the state, the overall energy production from solar energy is only more than 4% of the total electricity consumption, the impact on the purchase cost being approx. INR 0.06 per kWh, which is miniscule compared to the negative impact that breaching the sanctity of contracts would have on general investor sentiment of the state, ”Mehta wrote.

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