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Indian Power Developers Continue To Face The Whimsical Ways Of The Buying Utilities Leading To Litigation

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The Indian power industry is a tough place with falling prices and utilities which refuse to honor their past commitments. The whole Indian electricity sector is undergoing a massive upheaval with prices dropping drastically with both solar and wind prices in recent auctions going below the INR 2.5/kWh mark or less than USD 4 cents/unit. This has led many of the buying utilities to have a case of “Buyer’s remorse” and they are refusing to sign PPAs with the sellers. They are also forcing the existing PPA’s to have their prices reduced in the wake of the falling industry prices. The other key problem facing the power developers is that many of the large states are backing down their power plants for flimsy reasons.

Some of the large power developers such as Adani, Welspun and others have filed a case with the High Court against Tamil Nadu for restricting the power sales from their solar units in that state. The Indian power industry makes it mandatory for solar and wind power to have their sales bought by the contracting utilities. But using some technical reasons, the utilities do not buy this expensive power in periods of surplus power.

Solar India

India’s central owned power utility NLC India is facing a difficult situation with the western state of Rajasthan which is refusing to honor the PPA for two coal power plants that were signed in 2012 at a price of INR 4.5/kWh. Given that Rajasthan is building gigawatts of solar power at a price of less than INR 3/kWh, the state government does not want to sign the agreements anymore. While NLC has offered a 12.5% reduction in the price, the state government is still not willing to play ball. Despite already spending a couple of hundred of million dollars, NLC India does not have an assured off-taker of its thermal power plants. NLC is a government of India undertaking and it will look peculiar with two government-owned agencies fighting against each other in courts especially when both the central and state government are ruled by the same party.

As India builds more and more of renewable energy capacity, it will become difficult for the developers as states curtail the purchase of renewable energy power. India does not have a well-developed balancing market nor a good system to deal with a power curve that is going to become steeper by the day. The grid curtailment might become a common occurrence if the supply and the demand are not balanced in a proper manner.


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

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