India looks to unblock projects

Soon after Narendra Modi's re-election, the Ministry of New and Renewable Energy (MNRE) is battling to resolve key issues facing renewables. But state governments have other ideas.

Andhra Pradesh wants to renegotiate feed-in tariff rates, despite the energy ministry's warning against it
Andhra Pradesh wants to renegotiate feed-in tariff rates, despite the energy ministry's warning against it

Most of the more than 10GW of wind capacity awarded in federal auctions over the last two years has still not been commissioned due to ongoing disputes over land acquisition and grid connectivity.

The developers that were successful in those tenders petitioned the ministry to set up a mechanism for sorting out these differences. MNRE has now set up a three-member dispute resolution committee (DRC) to resolve any hold ups between developers and government agencies SECI and NTPC, which adminster the contracts procured in federal auctions.

The DRC has the power to directly contact parties involved in a dispute without any intermediaries. It also has the option of consulting MNRE on special cases.

The DRC would give its recommendations to MNRE, which will review the case then put it to the minister for a final decision.

Tariff review

Despite a missive from MNRE, the newly-elected Andhra Pradesh government has set up an internal committee to review existing power contracts for wind and solar and recommend rates for renegotiations.

The state has regularly threathened to revise the contract terms and reduce the tariffs of power contracts signed under the feed-in-tariff (FIT) regime after the introduction of state and federal auctions saw prices falling drastically.

MNRE has written a letter asking the state not to revisit tariffs for awarded contracts as it would disturb the national goal of renewables and hurt investor confidence.

Questioning the legality of the move, MNRE said the FIT, as well as reverse auction contracts, had been framed under the provisions of the Electricity Act and had undergone public hearing before the contracts were signed.

The new committee will look at different benchmarks, including the lowest prevailing sale rate to make its recommendations within 45 days.

This is a big setback for MNRE as any renegotiation of contracts could result in other states following similar routes.

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