India’s giant solar project in Thar desert runs into environmental hurdle
September 1, 2014Solar manufacturers look to expand capacity as global supply catches up with demand
September 3, 2014GUVNL at a loss!
The Indian government utility Gujarat Urja Vikas Nigam Ltd. (GUVNL) has lost out on a case to reduce the solar feed in tariffs for the state of Gujarat. GUVNL has been trying to sharply reduce the FIT given to solar developers as per the Gujarat solar policy in 2009, which granted fixed tariffs over 25 years. This led to a huge boom in solar installations in the state leading to more than 900 MW of solar power plants being granted the subsidy.
GUVNL has found it tough to pay such high amounts of money to the numerous solar power plant owners. The utility wanted to reduce the payout as it thinks that the solar developers are making too much money, since the solar panel prices fell after the FIT order was announced and the plants were commissioned. This led to super normal profits for the solar power plant owners. Note retro taxes and reductions have been imposed in a number of places such as Czech, Spain etc. where similar problems have come up with fixed FIT leading to massive solar booms.
GUVNL also faces a similar predicament but its appeals and efforts have constantly failed in different regulators and courts. The reason is that the contract was for 25 years and there was no provision for changing the contract in the middle. It was a mistake made by the then policy makers and bureaucrats, who made the decision to go ahead with fixed tariffs with no limits on the solar capacity.
It remains to be seen how GUVNL manages to deal with the large power bills and how it will pass it to customers or whether the government will bear the burden of paying the bills for the solar power plant. 1 GW of plants will generate approximately 1500 million units per year, which means an outgo of 1800 million rupees a year at around Rs 12 per unit.
An Indian court threw out an attempt by a government utility in Prime Minister Narendra Modi’s home state to backtrack on contracts by cutting the rate paid to solar plants for their power.
India’s Appellate Tribunal for Electricity dismissed an appeal by Gujarat Urja Vikas Nigam Ltd. to reduce the solar-power tariff as “devoid of merits,” according to a copy of the judgment. That upholds an August 2013 decision by the Gujarat Electricity Regulatory Commission.
“In effect, there can be no reduction in tariff,” nor any attempt to renegotiate the rate individually with plants, said Hemant Sahai, a lawyer representing the solar developers.