PPAs for over 1 GW of solar on the horizon in Jharkhand, India

With the solar industry moving fast and unrelenting in India, unsurprisingly, there have been some complications along the way. In the state of Jharkhand, discussions over the quoted tariff for solar energy had stalled the signing of PPAs for over 1 GW of PV projects, but now it looks as if any disagreements have been resolved, and the PPAs are soon to be signed.

The 1.1 GW capacity is spread across 30 solar PV projects, which will be completed by eight developers, in the state. Local company ReNew Power has the largest chunk of the pie, with 522 MW of projects waiting for PPAs to be signed. The average tariff for the energy produced from the projects is Rs. 5.375 (USD 0.0793) per kWh, while solar analysis company Mercom Capital reports that the PPAs are expected to be signed by the third week of December 2016.

The developers have been waiting since early 2016 to sign PPAs, after the winners of the tender were announced in March. A number of stumbling blocks have delayed the signing, including a disagreement between solar developers and the state distribution company (DISCOM) over the agreed tariff, while issues of land availability had exacerbated the problem.

“Budgetary support to fund the difference of the cost of solar power and the weighted average pooled power cost has been approved and the PPAs are expected to be signed around the third week of December,” commented a Jharkhand Renewable Energy Development Agency (JREDA) official stated. “Jharkhand recently passed legislation allowing the acquisition of tribal land for public service purposes. As renewables come under public services, this legislation comes as a relief to developers and resolves problems relating to land acquisition.”

The solar industry has been cautious in Jharkhand as land availability and insurgency issues have added to the standard deployment challenges. Smaller developers have also been stifled by the delay of the PPA signing, because their money is tied up until the signing, meaning they have not been able to bid for new projects.

“Jharkhand is a good example of the disconnect between high level policy making on paper and the challenges on the ground,” commented Mercom Capital Group CEO Raj Prabhu. “Many state agency officials still do not understand that project economies vary from region to region in the country. Power demand, grid capacity, and budgetary constraints are not well thought out before tenders are announced in some states.”