NTPC to buy modules separately for solar projects

In order to reduce the cost of solar-based generation, state-run NTPC is planning to invite separate tenders through which it will buy solar modules and construct solar parks through different contracts. Sources in the company said this is expected to reduce expenses as modules comprise about 80% of project costs and procuring them directly from manufacturers should help the company discover attractive rates.

“Tenders for about 1,000 MW of such two-part solar contracts, the first of many such upcoming tranches, can be expected in the next couple of months,” a person aware of the developments told FE. “One tender will be for modules and another separate bid will be conducted for ‘balance of system’ (construction),” the person added. NTPC, the largest thermal power producer in the country, has more than 900 MW of solar and wind generation units in its portfolio. By 2030, it plans to have a total power production capacity of 1,30,000 MW, out of which, solar would comprise 30,000 MW. Currently, the total installed capacity of the power behemoth stands at 57,356 MW.

Apart from its own green projects, NTPC acts as an aggregator of renewable energy through which is it supplies power to a number of states from solar and wind plants owned by other developers. The ministry of new and renewable energy has identified NTPC as the nodal agency for setting up 20,000 MW solar and wind power capacity through this mode. Recently, the Central Electricity Regulatory Commission (CERC) granted trading licence to the company to facilitate such transactions. NTPC earns a trading margin of `0.07/unit from such transactions.

However, in the light of recent developments like non-payment of dues to renewable energy plants by Andhra Pradesh, NTPC is planning to gradually shift away from such trading-margin based business. Solar projects of even the central government-run Solar Energy Corporation of India (SECI) and NTPC were not spared by the Andhra Pradesh government’s recent decision of revising renewable energy tariffs. NTPC has nearly 29% of its installed solar capacity in the state.

Also, in their quest to cut power purchase costs, sources say, states such as Andhra Pradesh, Punjab and Bihar have been requesting power regulators to reduce the trading margin for renewable aggregators to `0.02/unit. Recently, CERC has refused to approve the Re 0.07/unit trading margin to SECI for a few projects where it is the aggregator, raising questions about the certainty of getting assured returns from this business model.

Source: Financial Express