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After Tamil Nadu and Maharashtra, wind developers find it painful to get money from Rajasthan Electricity companies

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Wind Energy Rajasthan

Wind energy developers have faced payment issues from time to time, as cash strapped distribution utilities in some states have not disbursed money for the electricity generated by the wind turbines on time. There was a major issues in receiving payments in Tamil Nadu a couple of years ago leading to an almost complete stall in the development of new wind energy projects in the state.

The mostly bankrupt utilities of TN used system risk issues to curtail power procurement from wind energy projects in the state. This used to cause big issues for the wind players as wind turbines do not require fuel with most of the costs accounted by the capex in the procurement of equipment. The power generated mostly goes to waste in case of wind and solar power in case they are not sold immediately. It is not possible to defer power generation like in case of fossil fuel power plants such as coal, gas and nuclear. Hydro power can also store power, therefore most regulatory authorities make wind and solar power procurement as “must buy” from utilities.

Also read List of Wind Energy Companies in India

In India, there is cutthroat competition amongst wind and solar companies leading to very low tariffs being bid. This means that even if there is a little downward change in revenues from the sale of power from these RE farms, then it leads to huge losses for both these companies. Rajasthan has been curtailing power buys from wind farms for 2-3 times a day making it extremely difficult for wind power developers in that state.

Wind Energy

Due to easy access to land and RE friendly policy, Rajasthan has seen a huge ramp up in power development in the wind and solar sectors. However, Rajasthan does not have a large demand as it is not very industrialized. Most of the power that is expected to be generated from the wind and solar farms in that state has to be sold to other states. However, interstate sale of power polices and regulations are not very developed. The transmission system is also not very mature and does not have enough capacity to move large amounts of RE power from one part of India to another. While there are large investments being made in augmenting the power distribution infrastructure, it will take time for these investment to bear fruit.

Both the state and the wind developers are trying to ameliorate the situation without going to courts which is a long arduous and in the end a costly process. The wind developers are proposing to improve systems to predict the generation for power from the wind turbines using forecasting software and equipment while the state discoms are saying that they will not stop buying power based on flimsy reasons.

Read about the Power Companies in India

Discom health is cited as the biggest risk by RE developers while building solar and wind power plants in India. Solar developers have not faced any issues till date but that is also because solar energy is just 6 GW of capacity now, compared to the almost 30 GW of wind energy capacity. Once solar starts to grow by 10 GW a year, such issues will crop up. Developers have been cautious in signing PPAs with discoms which have good health or good counterparties such as NTCP or SECI. But there are also a number of developers which have discoms as the direct counterparties.

In the future, it will be important for all solar companies not only the ones who build the ground mounted plants but also the rooftop solar developers to think of the payment authority to whom they are selling power to. They might create a number of genuine or flimsy reasons not to buy or pay for the power generated. Distribution utilities in India are also corruption ridden like other government organizations such as the police or transport authorities.

 

 

PG

Sneha Shah

I am Sneha, the Editor-in-chief for the Blog. We would be glad to receive suggestions, inputs & comments on GWI from you guys to keep it going! You can contact me for consultancy/trade inquires by writing an email to greensneha@yahoo.in

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