RE Projects Approval Suspended In Rajasthan

Rajasthan Renewable Energy Agency Suspends Renewable Energy Projects Under REC Mechanism With Immediate Effect
06:52 PM (Beijing Time) - 06. September 2017
n_mar_Asia_India_RE Project Approval Suspended

Rajahsthan’s State Cabinet headed by Chief Minister Vasundhara Raje (in the middle) needs to take a call on how long the suspension of solar and wind project approvals remain in effect in the Indian state. (file pic; Photo Credit: Rajasthan Renewable Energy Corporation Limited RRECL)

Key Takeaways

  • Rajasthan Renewable Energy Corporation Limited (RRECL) has suspended project approval of all solar and wind power projects under REC mechanism
  • It won’t be approving any new renewable energy projects under REC mechanism until further orders
  • The agency attributes this to the reasoning that DISCOMs pay more to purchase renewable power through REC mechanism compared to the open market
  • It’s now on the state cabinet to decide on timing of the suspension

Solar and wind power projects in the state of Rajasthan under the Renewable Energy Certificate (REC) mechanism suddenly find themselves in a limbo. Their project approval has been suspended by the Rajasthan Renewable Energy Corporation Limited (RRECL) with immediate effect until further notice. The state cabinet is expected to set a time duration of suspension.

An RRECL official told Mercom Capital, “In Rajasthan the lowest solar tariff was quoted at, ₹2.44 ($0.038)/kWh; if distribution companies (DISCOMs) purchase power through the REC mechanism, they pay a higher price at ₹3.46 ($0.054)/kWh. The first issue is that they are paying more for power than they can on the open market; the second issue is that the DISCOMs are not getting credit for meeting their RPO obligations when they purchase power under the REC mechanism – the generators receive the RPO credit.”

The state level screening committee (SLSC) will not be approving any new renewable energy projects under the Renewable Energy Certificate (REC) mechanism. In a letter issued to the stakeholders, RRECL has made it clear that it won’t entertain any applications for registration of projects under REC mechanism until further orders.

This should come as a big blow to the solar power developers in Rajasthan who already are engaged in a tussle with electricity distribution companies, which have long been unwilling to buy power from solar power producers citing higher rates compared to the current low prices achieved in recent auctions (see TANGEDCO Wants Retroactive Solar Tariff Cuts).   

While the Government of India is trying to put processes in place to ensure fairness in solar power procurement, apparently the rapid growth of solar is meeting increasing resistance with traditional stakeholders (see MNRE Issues New Guidelines For PV Projects).

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