To avoid penal charges, ReNew Power’s committed supply to discom is the key

Twesh Mishra New Delhi | Updated on May 12, 2020 Published on May 12, 2020

ReNew Power will have to supply at least 2,803 million units (kilowatt-hour or kWh) of energy in a year to avoid any penal charges under the recently concluded e-Reverse Auction for Renewable Energy projects with round the clock supply. The bids were conducted by central Public Sector Undertaking, Solar Energy Corporation of India (SECI) for power to be sold to the New Delhi Municipal Council (NDMC) and Daman & Diu and Dadra & Nagar Haveli.

“A minimum 80 per cent energy must be scheduled (offered to the buyers) of the committed quantity on an annual basis. The off-take (purchase) commitment is for up to 100 per cent (of 400 MW) but not beyond it. On a monthly basis, the energy supplied should not go below 70 per cent of the committed quantity,” SECI’s Chairman and Managing Director, Jatindra Nath Swain told BusinessLine.

Till now, renewable energy tenders sought bids on a committed installed capacity for projects and subsequent supplies. The actual energy supplied in a day from these projects was always much lower than the installed capacity (around 20 per cent) due to the lower plant load factor of renewable energy.

Under the recently concluded SECI tender where ReNew Power emerged as the lowest bidder, a supply commitment has been made for 400 MW. The bid has been won for a first-year tariff of ₹ 2.90 per kWh with a 3 per cent annual escalation for the first 15 years of the 25-year term of the Power Purchase Agreement (PPA).

“Under the terms of agreement ReNew Power will have to ensure that it operates and maintains with 80 per cent capacity utilization annually and 70 per cent PLF every month to Discoms (Power Distribution Companies) throughout the tenor of the PPA. A normal renewable energy project in India operates with the capacity utilization rate of 30 to 40 per cent depending upon the choice of technology and resource availability,” a ReNew Power statement said.

According to SECI officials, this would come up to at least 2,803 million units (kWh) of energy in a year at the minimum 80 per cent supply commitment. On a monthly basis, ReNew will have to supply at least 201 million units (kWh) of energy in a month, assuming the minimum 70 per cent supply commitment.

“Failure to achieve the above requirements in terms of the power purchase agreement, would result in removal of tariff escalation in the subsequent year(s), until the above requirements are achieved in a particular year,” an official statement said.

Published on May 12, 2020
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