Renewable Energy Reforms Coming Soon

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The News

According to sources, the Union power ministry is set to come out with rules to pool solar tariffs to accelerate the procurement of solar power by power distribution companies.
The government is also looking to boost bundling of renewable energy in existing thermal Power Purchase Agreements (PPAs).
What will be the benefits of this?

The government bringing pooling of all solar power procurement in a given period and ask all buyers pay an average of all the tariffs that are contracted in a pooling period.
For example:
- If one Power Purchase agreement is signed at an agreed tariff of Rs 2.5 (per unit) and then the price falls to say, 2.3 (per unit), then the tariffs will be averaged out under new PPA (2.4). For both PPA’s the resultant average tariff will be 2.4 per unit.

The solar power tariff is discovered price by Solar Energy Corporation of India (SECI).
Owing to fast track developments in solar sector, the price of solar power is falling. A consistent fall in solar power tariffs has led to discoms waiting for a further fall in tariffs rather than contracting PPAs at current prices.
SECI is 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.
A move to pool tariffs could help speed up procurement of solar power.

The Centre is also encouraging bundling of renewable energy with thermal power under existing PPAs.
In Nov 2021, power ministry, permitted thermal generation companies to supply power to customers from their renewable energy projects under the existing PPAs.
- Bundling of renewable energy with thermal power would particularly benefit old thermal power projects which have become unviable due to high variable cost.
The Centre is targeting bundling of 10,000 Megawatt of renewable energy with fossil fuel based power over the next 4-5 years.