NTPC yet to get nod for 800MW auctioned wind power projects.
October 07, 2019
The fate of around 800 MW out of 1,200 MW of wind power auctioned by NTPC last year remains uncertain because the state-owned firm has not been able to get regulatory approvals.
Hero Future Energies, Renew Power, Continuum Wind, Sprng Energy, EDF and Mytrah Energy had emerged as the biggest winners of the auction conducted in August 2018, with tariffs ranging between Rs. 2.77 and Rs. 2.83 per unit.
The state regulator’s approval for adoption of tariff is required within two months after signing the power purchase agreement (PPA) or the power sale agreement (PSA), whichever is first. But with the power regulators delaying their consent, this period has lapsed and NTPC has given the winners the option of withdrawing altogether, according to people aware of the matter.
“Approval has not been got for 600-800 MW, so developers are trying to decide if they want to go ahead because the time frame for commissioning, which is 18 months, will not be extended, according to NTPC’s terms,” an industry executive told ET on condition of anonymity.
Among the winners, Mytrah has decided not to commission the project because the state power regulator in Uttar Pradesh has caused a delay. “We did it because banks are not funding projects without regulatory approval,” said the company’s managing director Vikram Kailas. “It would be a dangerous situation if we were to go ahead and build the project expecting approval to come later on.”
Mytrah was one of the two largest winners of the auction, having bagged 300 MW.
Solar developers in Andhra Pradesh are in a dilemma because they began constructing projects without prior approval of the state regulator. Earlier, the approval was considered a mere formality once the price had been discovered at an auction. But the new YSR Congress government changed its stance on renewable energy tariffs, so those projects are now facing payment risk from the discom because the tariff has not been approved by the regulator. "Learning from that experience, nowadays developers don’t want to take that risk,” said another executive.
Another winner said the decision to withdraw had not been made yet. “I can’t start investing till the regulator approves the PSA. More delay the regulator causes in extending the approval, lesser the time I have to commission my project,” said a senior executive at the firm.
The other winners did not respond to queries and those sent to NTPC too remained unanswered.
In one case, orders have been placed with a prominent OEM (original equipment manufacturer) by the developer but work hasn’t begun. “Since the IPP (independent power producer) has already made payments to the manufacturer, it is keen to start work but the OEM is unwilling,” said another person.
“The current delays in adoption of tariffs increase the risk perception of project commissioning delays in future NTPC tenders,” said Atin Jain, associate, Bloomberg New Energy Finance. “A tender for 1.2GW of ISTS-connected wind projects from NTPC is currently open for bidding. The delays could result in lower participation from power producers in the new tender.”