Delhi-Based Utility Signs 350 Megawatt Solar & Wind Agreements

In a move to fulfill its Renewable Purchase Obligation (RPO), Delhi-based power distribution utility Tata Power Delhi Distribution Limited (TPDDL) has signed fresh power supply agreements to procure wind and solar power from projects located across the country.

The Delhi Electricity Regulatory Commission (DERC) recently approved power supply agreements between TPDDL and the Solar Energy Corporation of India (SECI) to delivery of 300 megawatts of solar and 50 megawatts of wind power to the former. 

TPDDL is expected to procure 300 megawatts of solar power at a tariff of Rs 2.57/kWh (3.72¢/kWh) which is among the lowest solar power tariffs seen in India, and significantly cheaper than almost all thermal power plants operational in India. The distribution utility also secured an approval to acquire 50 megawatts of wind power at a tariff of Rs 2.52/kWh (3.64¢/kWh) which, again, is among the cheapest wind energy tariffs in India.

The cheap sources of renewable power would help TPDDL to fulfill its Renewable Purchase Obligation which requires it to purchase a set minimum percentage of electricity from renewable energy sources every year. Additionally, such cheap rates of electricity would also help the utility make significant financial savings, which could then be passed on to the end consumers.

Other power distribution companies operating in India’s capital have also signed similar agreements with SECI. BSES Rajdhani Power Limited and BSES Yamuna Power Limited will acquire a total of 200 megawatts of wind power from SECI soon.

Other privately-owned power distribution companies have issued tenders to acquire solar and wind power to meet their RPO targets. Gujarat-based Torrent Power, which supplies electricity in the cities of Ahmedabad and Surat, had earlier this year launched a tender to acquire 300 megawatts of solar power.

The arrangement wherein SECI auctions solar and wind energy projects to project developers and signs power purchase agreements with them and then power supply agreements with distribution utilities is now looking to be a highly effective arrangement. Project developers have the safety of timely payment from SECI and are not required to deal with the debt-ridden power distribution utilities. This financial safety also results in competitive bidding which, in the long run, will reduce the power procurement costs of utilities, and lower power bills for customers.