
Delays in the signing of power supply agreements (PSA) by states waiting for further drops in Renewable Energy (RE) tariffs for buying solar power from generators is emerging as a big problem, said NTPC CMD Gurdeep Singh.
Speaking at the India Energy Week, Singh outlined the challenge faced by power generators. “Now the problem is delaying in signing of PSA by states as they wait for tariffs to fall further in new bids,” he said. NTPC is a major player in the green energy segment.
NTPC, a central government PSU, is one of the four Renewable Energy Implementation Agencies (REIAs) designated by the Ministry of New and Renewable Energy (MNRE). Others are Solar Energy Corporation of India (SECI), NHPC and SJVN.
The tariffs have been on a decline and according to industry estimates solar prices ranged from Rs 4.65 to Rs 5.15 per kilowatt-hour (kWh) in 2015 and had dropped to around Rs 2.15 to Rs 2.40 per kWh in 2024. Some states expect it to go below Rs 2 per kWh soon.
According to a recent media report, RE projects of 40 GW have failed to find a buyer in the last year. Among these, NTPC and SECI have the highest pending bids of 12 GW each failing to find a buyer.
As per the bidding process, after signing the PSA with the state, a ‘letter of allocation’ (LoA) should be awarded 180 days after the tender announcement, followed by a power purchase agreement (PPA) with the respective REIA. The REIAs play a key role in tendering of RE capacity, finding buyers for the projects, and facilitating the sale and purchase of RE power while earning a trading margin.
Singh who was speaking at a panel discussion ‘Scaling renewables and the advanced energy solutions landscape’ shared the stage with other government industry players.
On the state’s wait-and-watch strategy, Gaurav Gupta, Additional Chief Secretary, Department of Energy, Karnataka expressed that solar tariffs are expected to fall to Rs 2 per kWh.
Keeping in mind the intermittency challenge of renewables, the government has decided to issue the majority of RE tenders integrated with storage capacity.
Rahul Munjal, Founder Chairman and MD, Hero Future Energies said that RE had two major issues—cost and intermittency. “What we have seen is that 50% of bids in last quarter had battery storage projects compared to just 20% in the last year, which addressed the intermittency part,” he said.
The prices of battery storage solutions have gone down drastically. According to ICRA, the discovered tariff under the BESS tenders more than halved from Rs 10.84 lakh/MW/month in the first SECI tender in August 2022 to Rs 4.49 lakh/MW/month in March 2024 in a tender by Gujarat.
“Battery storage prices have fallen off the cliff and it has changed how the world looks at the oil sector. The battery will change the pace of transition,” said Amit Singh, CEO, Adani Green Energy.
India has a massive solar expansion target as part of its roadmap to have 500 GW of non-fossil fuel power installed capacity by 2030.
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