The solar power sector faces a hurdle in meeting its ambitious growth target as cash-strapped distribution companies (discoms) are purchasing cheaper electricity from the exchanges and via e-auction.
Some discoms are simply resorting to power cuts as they cannot afford to even purchase power at low rates on the exchanges. The increase in renewable energy (RE) capacity addition has caused some solar power curtailment issues in Rajasthan and Tamil Nadu, where discoms have flouted the “must run” status of solar power, affecting developers. Currently, power is traded at Rs 2.40 to Rs 2.50 a unit on exchanges and on e-auction platforms compared to Rs 4-Rs 5 a unit for solar power under power purchase agreements (PPAs). Raj Prabhu, chief executive of Mercom Capital Group, said the curtailment was still not widespread, but the issue has to be addressed immediately before it hurt investor sentiments. “The problem is more pronounced in Tamil Nadu, especially in high wind energy density areas when wind and solar generation peak simultaneously. In Tamil Nadu, curtailment is mostly due to the utility opting to buy cheaper power from exchanges rather than paying Rs 7 a unit for solar (the state has signed PPAs for that rate),” he said.