• The Ministry of New and Renewable Energy (MNRE) wants solar power projects to be favoured over thermal power plants as the former save fuel, while the latter cost fuel
  • Load dispatch centres have been asking for solar power to back down, triggering opposition from MNRE
  • Solar power project developers are now asking for two-part tariffs, which are currently only enjoyed by thermal power plants.
  • MNRE is now asking for clear regulations to enforce 'must run' status of solar power projects in the country

Resistance is growing from the traditional power sector as the government in India aims big on the solar front, setting 100 GW of solar power installed capacity by 2022. Some load dispatch centres have been reported to be asking solar projects to back down. But the Ministry of New and Renewable Energy (MNRE) has come out in full support of solar.

In a strongly worded letter to the Secretary of Central Electricity Regulatory Commission (CERC), MNRE Joint Secretary Tarun Kapoor stated that rather the thermal power projects should be asked to back down to save fuel instead of clean energy sources, like solar. Solar power must have ‘must run’ status as it does not require fuel cost.

Indian thermal power projects have a two-part tariff since 1992. One part is a fixed tariff covering operations and maintenance costs, among others; the other part depends on the units actually consumed. The variable part is over and above the fixed tariff. Solar power plants only have fixed power purchase agreements.

According to Kapoor, solar plant developers have started asking for two-part tariff for solar power as well. The letter read, “They (solar power projects) should be paid full tariff if they are forced to back down in rare cases. It is requested that this issue be placed before Forum of Regulators so that some consensus can be reached on this issue.” He called for clear regulations by appropriate commissions to enforce the ‘must run’ status for solar power projects.

The Indian solar power plant sector is now greatly at risk of grid curtailment. Non-availability of grid can ‘gradually destabilise the solar projects in the ensuing years’, predicts India Ratings & Research (Ind-Ra). In the last three years, Tamil Nadu has had to curtail grid availability to renewable energy projects. The credit agency comments, “Ind-Ra notes that there is no provision for compensation in case a renewable energy project is unable to supply power in the event of grid curtailment. The lack of this provision, leaves the renewable energy project stranded whenever there is curtailment and they appeal to the regulators over the non-compliance of the must run status.”

Ind-Ra analyst Divya Charen points out, “The monopoly in distribution infrastructure and lack of technology aids – to predict the source risk, tests the endurance of renewable projects and consequently renewable energy remains hostage to state utilities.” The curtailment issue may also threaten the credit worthiness of such projects, which could even lead to problems in future capacity addition, believes Charen.