DISCOM and Developers Agree on Renegotiated Tariff of ₹4.95 (~$0.0762)/kWh in Jharkhand to Develop 685 MW of Solar Projects

September 22, 2017


Mercom has confirmed that in Jharkhand, power purchase agreements (PPAs) for a total of 685 MW of solar projects out of 1.1 GW will be signed over the next few days. The state distribution company (DISCOM) and developers have agreed on tariff renegotiation, paving the way for PPA signing after more than a year in limbo.

With this development, Jharkhand has become the third state after Uttar Pradesh and Tamil Nadu to successfully renegotiate solar power tariffs.

The Director at Jharkhand Renewable Energy Development Agency (JREDA) told Mercom, “as we speak, a workshop is underway for PPA signing and clarification; developers have agreed to develop projects at renegotiated tariff.”

“The tariffs are set in two slabs, ₹4.95 (~$0.0762)/kWh for projects that are more than 25 MW and ₹5.16 (~$0.0794)/kWh for projects of capacity below 25 MW. The PPAs will be signed within the week,” added Director JREDA.

One of the largest winners in the auction commented, “they asked to lower tariff we agreed, in return we asked to reduce the capacity allocated.” After months of squabbling both parties agreed upon the renegotiated tariff and capacity.

According to Mercom’s sources, PPAs will be signed for about 685 MW, as firms believe that at the lowered rates it will be difficult to commission the entire capacity they had initially won.

Mercom has confirmed that ReNew Power was the largest winner with over 500 MW, but it will develop close to 392 MW, Suzlon was awarded 175 MW, but has agreed to develop 130 MW, OPG Power won bid to develop 124 MW, but has sliced its capacity to 100 MW, Adani has chosen to develop 40 MW out of the 50 MW it won in 2016. Madhav Infra will develop 15 MW out of the awarded 20 MW and Karvy Consultants have agreed to develop 7.5 MW out of the awarded 10 MW.

Something is better than nothing said an OPG Power executive. Better late than never, at least we can now start work in Jharkhand.

A Jharkhand State Electricity Regulatory Commission official told Mercom, “this will pave way for other projects and also serve as a reminder to implementing agencies not to overreach for target achievement.”

A Suzlon executive commented, “wheels are moving in Jharkhand after being stuck in a rut; the state has huge untapped potential.” These projects were originally auctioned in early 2016.

According to Mercom’s India Solar Project Tracker, tariffs quoted in the state ranged from a high of ₹5.59 (~$0.0824)/kWh to a low of ₹5.08 (~$0.0749)/kWh. All other project developers agreed that this auction was too long drawn out, the state should have done the same within the first six months of the issue cropping up, it would have saved time and money.

Two developers involved in the auction said, in a way, it’s good for us, these tariffs are twice as much as what we see in the current tenders. ₹4.95 (~$0.0762)/kWh is cozy compared to ₹2.44 (~$0.0375)/kWh or ₹2.65 (~$0.0407)/kWh.

However, no two tariffs are equal as location, solar insolation, parks vs. non-parks, and other factors can affect tariff levels.

Image credit: By Citizenmj (Own work) [CC BY-SA 3.0], via Wikimedia Commons