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‘Solar power is a bit dicey; it depends on the regulatory environment’ says Tata Power executive

It is extremely difficult to tell somebody ‘please increase my rates’. We are trying to make them understand that without a tariff revision we would have to go strictly by the contract as per the legal requirement, which means we have to make the plant available only for 80 per cent of the time. — Mr S. Ramakrishnan, ED, Tata Power

Mr S. Ramakrishnan, Executive Director, Tata Power, spoke to Business Line on the overall power scenario, the impact of coal, pricing and the steps taken by Tata Power to curb losses on the fuel front.

What is the spread in your current portfolio?

Of 5,297 MW, hydro-electric is about 450 MW , wind-375 MW , solar-30 MW , gas-200 MW , and oil -500 MW. The rest is thermal.

And, the target Tata Power has set for solar and wind power…

Ideally, we wish to do 100 MW in wind a year. We had originally said we wanted to do 500 MW . Our idea now is to do 100-150 MW if the regulation and REC mechanism work favourably. Solar is a bit dicey. It depends on the regulatory environment. The Jawaharlal Nehru National Solar Mission is very competitive. I don’t know whether we can make money. Moreover, State regulatory processes are being reset. Prices are being reset as State regulators have now found that the prices they have set are high. Also, some are thinking whether they should set a price or allow competitive bidding. Ideally, we want to do about 25 MW of solar every year.

What are the risks if tariffs keep dropping, as the older solar plants command a higher tariff?

The only risk is if the buyer of power does not want to honour your power purchase agreement. Then you have a problem, as others will ask you to supply at the current rates. However, Tata Power is only dealing with Gujarat and its own distribution companies.

So, Tata Power will not have any issues?

I hope so; even though we have tied up with our own companies, everything is regulated. Since the regulators have approved the power purchase agreements, they will honour the tariff commitments.

Will Tata Power hold back on solar for the time being?

We have set up 25 MW in Gujarat and it is doing well. We have three MW in Maharashtra where the tariff is good but generation has to pick up. We have bid for four or five MW in Karnataka. We have land in Rajasthan which does not have evacuation facilities. Once that is up, we will bid. And, we are also talking to Tata Chemicals for more land.

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