According to reports, Thermal power plants are facing the heat from wind energy, prompting the regulator in Karnataka to order distribution companies to stop signing any power purchase agreement (PPA) with wind electricity suppliers until further notice.
In an April 25 letter to Rajneesh Goel, additional chief secretary with the energy department of Karnataka, the Karnataka Electricity Regulatory Commission (KERC), noted that the state has already signed enough PPAs with renewable energy developers to ensure it fulfils its renewable purchase obligation (RPO), not only for 2017-18, but also for the next two years.
RPO is a minimum percentage of the total power drawn by a state, which must be taken from renewable energy sources. The letter noted that overall too, “Perhaps for the first time, the power availability (in the state) is far in excess of the requirement” and signing more PPAs for renewable energy, especially wind energy, would lead to having to refuse power from thermal sources “with which the distribution companies already have longterm PPAs, resulting in unavoidable payment of fixed charges to thermal stations resulting in consequential increase in tariff for consumers”.
Karnataka had cumulative installed wind power capacity of 3,798.66 MW at the end of March 2017, of which 882 MW wasadded in 2016-17. Out of this, state discoms have contracted to procure 2,787.10 MW while the rest goes to third parties or captive consumers. The KERC letter said there had been “large-scale unplanned and unsustainable power procurement from renewable sources, especially from wind power projects, by state distribution companies, which would adversely affect their financial health and grid stability apart from increasing the burden on consumers”.
It added: “There is no need in the future for procurement of power from renewable sources, especially fromwind power projects, whose tariff, unlike solar projects, has seen periodical upward revision”. It alleged that discoms had “mechanically entered into PPAs with wind power projects”.
In a subsequent discussion paper issued on May 17, KERC also suggested that all further PPAs with wind developers (if signed at all) should only be through competitive bidding. The first and only wind power auction for 1,000 MW, conducted by Solar Energy Corporation of India in February, saw winning tariff fall to Rs 3.46 per kwH.
Accordingly, the KERC has suggested setting aside its own earlier order, which had decreed a tariff of Rs 4.50 per kwH up to October 2018, in favour of conducting auctions for which the reserve price, taking into account conditions prevalent in the state, should be Rs 3.61 per kwH. “The current tariff determined by this Commission at Rs.4.50 per unit is considerably higher and therefore, there is a need for mid-term tariff revision to ensure that consumers get the benefit of lower cost of wind power generation,” it said. It has invited comments from stakeholders on the discussion paper till June 15.