New order forces the Renewable Energy producers to pay more

Solar and Wind

Due to five times increase in certain charges that the Renewable Energy producers have to pay caused a sudden shock in the industry. The companies argued that they have no other option than to approach the court for a redress. The order is meant for wind, solar, mini-hydel and biomass energy producers who supply the energy directly to the consumers.

The Commission has raised concessional transmission charges and wheeling charges from 5 percent of what is applicable to conventional power units, to 25 percent. This order is effective for all the projects that have been set-up after March 2017. To take an advantage of the concessional charges, the developers planned to set up huge plants in Karnataka in 2017-18. Out of the 4,980 MW of the Renewable installation in 2017-18, about 2,000 MW was for direct sale to consumers.

CleanMax is the biggest player in the solar market that has set up over 270 MW of the capacity alone. ReNew Power and Amplus have installed around 170 MW each. Rays Power, Mahindra Susten and Prestige group are other big developers who have their projects in Karnataka.

The concessions have been canceled on the basis that the projects will still be profitable if the charges are raised according to the commission. Even after the increase, the power companies can sell to the consumers at a price that is 50 paise less than what the utilities charge for power.

To justify the claims commission says that,

 An industrial consumer would pay Rs 6.80 a kWhr, and a commercial establishment Rs 8.35 a kWhr. Quoting an unnamed green energy generator, the order says that a 50 paise discount to such tariffs would be “reasonable”. Therefore, energy producers could sell at Rs 6.30 and Rs 7.85 to industrial and commercial consumers. The raise in concessional would, therefore, leave the developers enough margin for their business. Why 50 paise discount, even if the developers sold their power at prices one rupee lower than the grid tariffs, they would still be profitable.

The developers on the other side feel that they made an investment on the basis of agreed price between them and the customers. This was done by taking the concession in the calculation. The new order can cause them to lose Rs 2.50 to Rs 3 a kWhr. They call it unfair on the governments part to lure with the concessions and then go back on its word.

Source:  Business Line

A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

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A group of tech enthusiasts who are tracking latest developments in CleanTech with special focus on Energy Storage and Electric Mobility

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