Punjab To Sign Power Sale Agreement for 500 MW of Solar-Wind Hybrid Power at ₹2.69/kWh

The state regulator set the trading margin as ₹0.02/kWh as requested by PSPCL


The Punjab State Electricity Regulatory Commission (PSERC) approved the procurement of 500 MW of solar-wind hybrid power from the Solar Energy Corporation of India (SECI) at a tariff of ₹2.69 (~$0.036)/kWh with a trading margin of ₹0.02 (~$0.0002)/kWh. The Commission directed the Punjab State Power Corporation Limited (PSPCL) to execute the amended power sale agreement (PSA) at the approved tariff and trading margin and submit a copy with the Commission within 15 days from the date of the issuance of the order.

PSPCL had filed a petition for approval of procurement of 500 MW of hybrid power from SECI on a long-term basis. It had also requested the Commission to approve the trading margin of ₹0.02 (~$0.0002)/kWh.

SECI, in reply to the petition, said that it was acting as an intermediary to facilitate the establishment of solar, wind, and wind-solar hybrid projects. It had to constantly invest in resources to initiate the programs to develop solar parks, wind parks and identify development areas at various places for setting up renewable projects.

Further, the nodal agency noted that there were payment security mechanisms such as letters of credit to be administered. The renewable developers demanded payment from SECI independent of SECI receiving the same from the buying entities. SECI had to constantly take steps to recover such payment from the buying utilities for the power supplied under the PSA.

Commission’s Analysis

The Commission noted that in the PSA signed on March 03, 2020, the trading margin was mentioned as ₹0.07/kWh, whereas in the petition, PSPCL requested to approve a trading margin of ₹0.02 (~$0.0002)/kWh. The Commission said there was no need to deliberate upon the tariff as it had already been approved by the Central Electricity Regulatory Commission (CERC) at ₹2.69 (~$0.036)/kWh.

The regulator noted that CERC had approved the tariff of ₹2.69 (~$0.036)/kWh based on competitive bidding. At the same time, it had not approved the trading margin of ₹0.07 (~$0.0009)/kWh and held that the trading margin should be mutually decided.

It observed that the obligation to maintain the payment security mechanism by SECI for the hybrid power developer was subject to opening the Letter of Credit by PSPCL. It was not the obligation of SECI.

Further, regarding SECI’s contention that it had to develop solar projects in remote areas like Lakshadweep and Andaman & Nicobar, for which it required revenue to meet its financial requirements from the trading margin, the Commission noted that this activity was distinct from the trading activity of SECI. “Such activities cannot be funded through trading margin chargeable to PSPCL and in-turn the consumers of Punjab,” the Commission added.

After considering the contentions put forth by SECI, the Commission felt that there was no reason to keep the trading margin higher than ₹0.02 (~$0.0002)/kWh.

Earlier, for the PSA signed between the Tata Power Distribution and SECI for 200 MW of solar power, the Delhi Commission approved a trading margin of ₹0.02 (~$0.0002)/kWh. The Commission had said, “the trading margin in case of long-term contracts has to be less than that of short-term contracts. CERC, in its trading margin regulations, 2010 had specified ceiling for trading margin as ₹0.04 (~$0.0006)/kWh on short-term transactions wherein the tariff is less than ₹3 (~$0.041)/kWh. CERC, in its trading margin regulations, 2020 had specified ceiling for trading margin as ₹0.02 (~$0.0003)/kWh for long-term transactions.”

The Punjab electricity regulator observed that the power procurement being hybrid in nature will help PSPCL fulfill its solar and non-solar purchase obligations.

Recently, the West Bengal Electricity Regulatory Commission (WBERC) approved the PSA executed between India Power Corporation Limited and SECI to purchase 100 MW solar-wind hybrid power. The PSA was approved for a tariff of ₹2.69 (~$0.036)/kWh with a trading margin of ₹0.07 (~$0.0009)/kWh.

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