In another possible boost for the renewable energy project developers, the Indian government is pushing for guaranteed grid connectivity for large-scale renewable projects.
The concept originated following the mega success of Rewa solar power park auction where 750 megawatts capacity was allocated to three developers at then lowest-ever tariffs of Rs 3.30/kWh (5.1¢/kWh), levelised for a period of 25 years.
The Rewa solar power park auction in Madhya Pradesh was unique in that it allowed developers to sell electricity through open access route even when the power utilities refused to purchase electricity. This, among several other industry-first features, led to the lowest-ever tariff bids of that time.
Now, the central government has asked other states to replicate the Rewa solar power park model in order to further push renewable energy investments. Such a step will offer more options to the project developers to sell electricity even when the host state or PPA parties are unwilling to acquire electricity as per signed agreements.
Unwillingness to accept electricity has been a major issue with Indian power utilities. Intermittent power supply, higher tariffs compared to some thermal power projects and poor financial condition has forced Indian power utilities to refuse electricity from renewable energy projects in the past. This leads to no generation at power plants and loss of confidence in renewable energy investors.
While the Ministry of New & Renewable Energy has issued an advisory to all state governments stating that renewable energy projects will have must-run status, its implementation remains in question as it is just an advisory and not binding on states.
The government is also working to implement dedicated transmission lines for renewable energy projects to help states implement the advisory. The Green Energy Corridors project, being implemented by Power Grid Corporation of India, will supply renewable energy from resource-rich states to resource-deficient states.
Such guarantees would not only result in further lowering of tariffs but also help avoid the situation being faced by grid operators in China – where massive wind energy capacity in remote areas remains under-utilised due to lack of transmission network – and Chile – where solar power developers were forced to sell electricity for free due to lack of transmission infrastructure.