India Allows Inter-State Solar Power Sale To Cut Developers’ Risk

In an attempt to mitigate any risks that prospective solar power project developers may face with the sale of generated electricity, India’s Ministry of New & Renewable Energy has announced a crucial modification in rules.

Perhaps taking note of the delay in signing of power purchase agreement for a 250 megawatt solar power project at the Kadapa solar power park in Andhra Pradesh, the Ministry of New & Renewable Energy has issued an amendment to the auction guidelines for solar power projects.

The project developers will now have the option to sell electricity to states other than the host state, subject to the issuance of no-objection certificate by the host state. The need for this amendment likely arose after the power distribution companies of Andhra Pradesh refused to procure electricity from a 250 megawatt solar power project awarded to Solairedirect.

The project was allocated to Solairedirect in April 2017 but the owner (NTPC Limited) is yet to official award the project to the company, as Andhra Pradesh utilities backed out while NTPC had failed to contract any new buyers. Andhra Pradesh utilities have now conditionally agreed to procure the electricity.

Such refusal by other utilities across the country could have spelt doom for the Indian government’s plan to achieve 100 gigawatts of operational solar power capacity by March 2022. This amendment also ensures that even if the installed capacity is concentrated on only a few resource-rich states, other states that are not in a position to meet their renewable purchase obligation can access solar power.

As of October 31st, 2017, India had an installed solar power capacity of 15.6 gigawatts. However, 44% of this capacity was operational in just three states — Andhra Pradesh, Telangana, and Rajasthan. This shows the highly-skewed geographical spread of solar power capacity across India and thus justifies the need for easy access for all states to solar power.