RE push: Rules to be brought in for pooling solar tariffs

Contact Counsellor

RE push: Rules to be brought in for pooling solar tariffs

  • The centre is set to come up with rules to pool solar tariffs and is also aiming to increase bundling of renewable energy in existing thermal Power Purchase Agreements (PPAs) to boost the procurement of renewable energy.
  • The government is aiming to boost installed renewable energy capacity to 500 GW (GigaWatts) by 2030.

Purpose and need of rules

  • The discoms (power distribution companies) are waiting for solar tariffs to fall further before entering procurement agreements.
  • The power ministry is working with the MNRE and would release rules to address the issue.
  • The intention is to have a pool in which various procurements that are done over a year, two or three years, their tariffs are pooled so that there is no problem that (some tariffs are) 5 paise lower or 5 paise higher.
  • A move to pool tariffs could help speed up procurement of solar power by addressing concerns among discoms of losing out on lower solar tariffs in the future.
  • The government intended that about 10,000 MW of Renewable energy based power would be bundled with fossil fuel based power over the next 4-5 year and this would also help lower total cost of power procurement for certain discoms.

Solar tariffs

  • Solar tariffs have fallen to as low as 3 cents or less than Rs 2.5 per kWh (kilowatt-hour) because solar panel prices have been falling for a very long time.
  • The centre had in November 2021 issued guidelines which permitted thermal generation companies to supply power to customers from their renewable energy projects under the existing power purchase agreements (PPAs) for coal-based electricity with gains from the bundling of renewable energy to be shared between generators and (discoms) on a 50:50 basis.
  • SECI (Solar Energy Corporation of India Limited) was however often finding it difficult to find buyers at discovered prices because discoms expect the tariffs will continue to fall even further and many of them have already met renewable purchase obligations.

Steps taken to promote renewable energy sources in the country

  • Permitting Foreign Direct Investment (FDI) up to 100 percent under the automatic route.
  • Waiver of Inter State Transmission System (ISTS) charges for inter-state sale of solar and wind power for projects to be commissioned by 30th June 2025.
  • Laying of new transmission lines and creating new sub-station capacity for evacuation of renewable power.
  • Declaration of trajectory for Renewable Purchase Obligation (RPO) up to the year 2022,
  • Setting up of RE parks to provide land and transmission to RE developers on a plug and play basis.
  • Schemes such as Pradhan Mantri Kisan Urja Suraksha evam Utthaan Mahabhiyan (PMKUSUM), Solar Rooftop Phase II, 12000 MW CPSU Scheme Phase II, etc.
  • Notification of standards for deployment of solar photovoltaic system/devices.
  • Setting up of Project Development Cell for attracting and facilitating investments.
  • Standard Bidding Guidelines for tariff based competitive bidding for procurement of Power from Grid Connected Solar PV and Wind Projects.