Wind Generators in Rajasthan Face Payment Delays and Non-Renewal of PPAs

DISCOMs in the state reportedly owe ₹8.43 billion to the wind developers

July 2, 2019


The Rajasthan Vidyut Utpadan Nigam Limited (RVUNL) has not renewed the Power Purchase Agreements it had signed with wind generators, despite the Rajasthan Electricity Regulatory Commission (RERC) passing an order to ensure continuity in renewable power purchases.

The PPAs, which expired in March 2019, have not been renewed yet.

Speaking to Mercom, the Indian Wind Power Association’s (IWPA) Rajasthan State Council’s Coordinator Santosh Kumar Sharma reiterated the development, saying, “The wind power developers in Rajasthan face the dual problem of PPAs not being signed, as well as dues to the tune of ₹8.43 billion ($122 million) from the DISCOMS of Jaipur, Jodhpur, and Ajmer since September of 2018.”

The RVUNL has been consuming the power produced from these developers, but it has not renewed the PPAs, which were signed for a five-year term. The project term is for 25 years, with the industry norm of renewing PPAs every five years.

In March 2019, the Regulatory Commission had issued new amendments to its regulations on renewable energy certificate and renewable purchase obligation compliance framework. According to the amendment, for distribution licensees, the effective electricity component price applicable to the projects commissioned up to March 31, 2019 and covered under REC mechanism will be equal to the pooled cost of power purchase, which has been capped at average of pooled cost of power purchase for Jodhpur Vidyut Vitran Nigam Limited (JdVVNL) for the period from FY 2011-12 to FY 2016-17, at ₹3.14 (~$0.045)/kWh.

Later, in an interim order, the Rajasthan High Court had directed the state government to comply and ensure the renewal of PPAs along with the clearing of dues by the DISCOMs.

Speaking to media at Jaipur, Rajendra Vyas, president of Rajasthan Chapter, Indian Wind Power Association said, “Despite repeatedly taking up the matter with the DISCOMs, RERC, and even the state energy department and the minister concerned, no headway has been achieved so far.”

Rajasthan wind developers are facing the double whammy of payment delays and high deviation settlement charges making their projects unviable.

Recently, Mercom had reported that a petition filed by the Indian Wind Power Association had challenged the validity of the deviation settlement mechanism regulations passed by the Rajasthan Electricity Regulatory Commission and requested it to be scrapped. The members of IWPA had pleaded that the DSM charges were high and that they were major sufferers due to unscheduled power cuts, refusal to offtake power by the state power distribution companies despite good generation during peak hours.

In another instance, a group of six independent power producers had filed separate petitions before the Rajasthan Electricity Regulatory Commission for the settlement of disputes regarding the methodology adopted by the DISCOMs in levy of wheeling charges. The six petitioners, who are wind and solar energy generators for captive use, had entered into a Wheeling and Banking Agreement with the concerned DISCOMs.

Soumik is a staff reporter at Mercom India. Prior to joining Mercom, Soumik was a correspondent for UNI, New Delhi covering the Northeast region for seven years. He has also worked as an Asia Correspondent for Washington DC-based Hundred Reporters. He has contributed as a freelancer to several national and international digital publications with a focus on data-based investigative stories on environmental corruption, hydro power projects, energy transition and the circular economy. Soumik is an Economics graduate from Scottish Church College, Calcutta University.