No Agreement Reached on Renegotiated PPAs for Six Solar Projects in Uttar Pradesh

An agreement on the tariff would have come as good news for project developers who are waiting in limbo and fearing termination of their contracts


The meeting between Uttar Pradesh Electricity Regulatory Commission (UPERC) and the project developers ended on January 31st, 2018, without an agreement on the negotiated tariff for six grid-connected solar photovoltaic (PV) projects planned for Uttar Pradesh.  

The projects, totaling 80 MW, have been stuck limbo since 2015 and were on the verge of being scrapped before the UPERC proposed adopting a lower tariff of ₹5.21 (~$0.082)/kWh for the first 12 years.

Under the proposed terms, the Average Power Purchase Cost (APPC) for the following 13 years defined in the PPA would be subject to a ceiling of ₹5.21 (~$0.082)/kWh.

In the meeting between the UPERC and the stakeholders, the two parties could not arrive at a consensus over the proposed tariff. Commenting on the conclusion of the meeting, a UPERC official said, “The stakeholder meeting to adopt the renegotiated tariff of ₹5.21/kWh for these six projects aggregating 80 MW has concluded. The stakeholders have put forth their deliberations. There was no clear acceptance of tariff proposed by the UPERC. All the generators did not agree to the proposed tariff citing various reasons and submitted the same to UPERC in writing. The UPERC has reserved its ruling as of now. In a few days, the final adopted tariff will be made known to all involved stakeholders.”

UPERC Renegotiated Tariff for 80 MW Solar Projects

The proposed tariff of ₹5.21 (~$0.082)/kWh looks attractive in the current low bid environment. However, low solar insolation in UP and other risks associated with project development along with policy uncertainties and possible safeguard, antidumping and port duties must be factored in.

The six projects were initially part of 16 projects that the Uttar Pradesh government reached a separate agreement on in 2015. Together, those 16 projects were expected to supply 215 GW of power to the state, but development was thwarted by disagreements between the government and developers over the quoted tariffs of the winning bids, according to Mercom’s India Solar Project Tracker.

Then, in November 2017, UPERC and the 16 developers agreed to adopt a renegotiated tariff of ₹7.02 (~$0.11)/kWh for the projects that had already been completed. Nine projects totaling 135 MW have been commissioned so far and the remaining six projects with a combined capacity of 80 MW are still awaiting commissioning and are poised to be subject to the most recently negotiated rates.

The Uttar Pradesh Power Corporation (UPPCL), in consultation with the Uttar Pradesh New and Renewable Energy Development Agency (UPNEDA), had earlier proposed terminating the contracts of those six companies whose projects had not yet been completed despite extensions to the project completion timeframe.

But then the developers – Adani Green Energy, Sahasradhara Energy, Pinnacle Air, Awadh Rubber Prop Madras Elastomers, Technical Associates, and Sudhakara Infratech – approached UPERC to prevent the termination of their PPAs.

In UPERC’s proposal to fix the new tariff for those six projects at ₹5.21 (~$0.082)/kWh, the commission took into consideration the developers’ apprehension about the power rates UPPCL could pay which caused them to delay the procurement of needed modules. UPERC also noted that the procurers had not taken the steps necessary to lay the transmission lines needed for power evacuation.

According to the proposal, UPERC directed the six project developers to complete their projects within five months of signing the PPAs at the renegotiated tariff rate. The extension comes after the National Solar Energy Federation of India (NSEFI) in August requested an extension for the project commissioning timeline.

Image credit: Flickr