Move to make solar power deals bankable delays developers' pact with NTPC arm

The power purchase agreements (PPAs) between solar power developers and the trading arm of NTPC, NVVN, could get delayed, as the Government is still working out mechanisms to make these agreements more bankable.

An official source told Business Line that “the core committee formalising the guidelines for calling expression of interests (EoIs) is yet to reach a decision. Efforts are being made to make the PPAs more bankable.”

Elaborating the official said, “Certain issues like payment security mechanism need to be addressed before the guidelines for inviting EoIs are notified. It is being felt that the balance-sheet of NVVN (NTPC Vidyut Vyapar Nigam) may not by itself lead to the bankability of PPAs. Hence, the possibility of setting up a risk guarantee fund is being considered.”

Guidelines

NVVN has been designated the nodal agency to procure solar power from photovoltaic (PV) and thermal project developers under the National Solar Mission. NVVN, in turn, will bundle four units of thermal power with each unit of solar power to bring down the final cost of power.Once the issues are resolved, the Government will notify the guidelines for the purpose. Earlier, the Government was expecting to notify the guidelines by second week of June.

Tariff notification

EoIs will be called for procuring solar power from the project developers. The project developers offering the best discount on a tariff notified by the Central Electricity Regulatory Commission (CERC) will figure higher in the pecking order during the allocation of identified projects under the Solar Mission programme.

The tariff rates notified by the CERC for 2010-11 are Rs 17.90 a unit for PV and Rs 15.40 a unit for solar thermal. The tariffs are notified annually by the CERC. For solar power from smaller rooftop systems, the respective State utilities are the designated agency to procure and decide on the tariff.

The Government expects about 800 MW of PPAs to be signed during the current fiscal, under the phase I of the National Solar Mission. For solar PV PPAs for nearly 200 MW out of the 500-MW, which are proposed in the first phase, is expected to be signed.While for solar thermal, it is expected that PPAs for all the 500-MW would be signed in this financial year itself.

For smaller roof top systems, it is expected that PPAs for 90 MW out of the 100-MW be signed by the respective State utilities

According to the Ministry for New and Renewable Energy, the target for the first phase (up to March 2013), under the Mission is to set up 1,100 MW grid connected solar power plants, 100 MW of roof top and small solar plants connected to grid and 200 MW capacity equivalent of grid solar applications.