Gujarat power regulator’s decision forces wind power firms, discoms to make an unhappy truce

The Gujarat power regulator’s decision to make February auction’s all-time low winning bid as the base price for wind power purchases has forced developers and power distribution companies in Gujarat make an unhappy truce, but it sets the stage for further trouble in the fledgling sector.

In a similar case in Andhra Pradesh, the state’s power regulator took a contrary position. Ignoring the wind auction, it set wind tariffs for 2017-18 at Rs 4.35 per kWh for projects which use the accelerated depreciation (AD) benefit and Rs 4.76 per kWh for those which do not.

AD is a concession given to renewable energy projects, allowing developers to claim 80% depreciation in the first year. However, Andhra Pradesh’s main generation company, the AP Power Generation Corporation (APGENCO), has said that given the results of the auction, it will ignore the regulator’s order and buy wind power only if the tariff is kept at Rs 3.46 per kWh.

Gujarat bought 86 MW of wind projects with wind power generators agreeing to asking price of the discoms. After India’s first ever wind auction in late February saw winning bids touch an all-time low of Rs 3.46 per kwH, the chairman of Gujarat Electricity Regulatory Commission (GERC) Roopwant Singh, wrote to all 12 discoms in the state suggesting they too should not buy wind power at a tariff higher than Rs 3.46 kwH.

Before the auction, discoms purchased wind power at prices fixed every year by the state’s power regulator. Accordingly, the GERC had set the tariff at Rs 4.19 per kwH for 2016-17.

The GERC’s fresh suggestion threw into jeopardy around 216 MW of wind power projects, which had been completed but awaiting signing of power purchase agreements (PPAs) with discoms. These power generators had formulated their business plans expecting a tariff of Rs 4.19 per kwH.

Gujarat discoms refused to sign PPAs at tariffs higher than Rs 3.46 per kwH. Developers have now accepted the new price of Rs 3.46 per kwH, but the fate of the remaining 130 MW is still undecided.

et energy

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