MP awards contracts for cheapest solar power; Rly to draw from seven states

The state discovered lowest tariff of Rs 2.14 a kilowatt/hour so far after applicability of basic customs duty

The Indian Railways would be tying up with a Madhya Pradesh government-owned entity to buy power from solar parks in the state but would draw it from the grid connectivity in seven states. Rewa Ultra Mega Solar Ltd (RUMSL) signed a letter of award for 1500 MW of solar power from Agar, Shajapur and Neemuch parks today. 

NTPC Renewable Energy Ltd, Avaada Energy, Beempow Energy, Talettutayi Solar, TP Saurya and Aljomaih have bagged capacities in the three parks. The state discovered lowest tariff of Rs 2.140 a unit (kilowatt/hour) so far after applicability of basic customs duty (BCD) regime. This was for Unit-2 of Neemuch solar park. For other two units of Neemuch solar park, tariffs were Rs 2.149 for Unit-1 and Rs 2.150 for Unit-3.

Tariffs for Shajapur solar park were Rs 2.350 and Rs 2.330 for Unit-1 and Unit-2, respectively. Further, tariffs for Agar solar park were Rs 2.459 and Rs 2.444 for Unit-1 and Unit-2, respectively.   The state is looking to float more tenders for hybrid power projects and bring in a new policy for green energy. 

The Railways enjoys waiver of inter-state transmission system (ISTS) charges that are levied when an entity buys power generated outside of a particular state. This will also help in central funding for setting up of a sub-station at the site. "It will socialise the cost of drawing power across all seven states and the developers will also not need to invest in the sub-station," Sanjay Dubey, principal secretary, new and renewable Energy, told Business Standard. The three parks would result in saving of over Rs 7,600 crore to power distribution companies of the state in 25 years, he said.

Power generated from these parks would be procured by power distribution companies of Madhya Pradesh (1305 MW) and the Indian Railways (195 MW). The parks are expected to get commissioned and start generating electricity by March 2023. “We have possession of 95 per cent of land. That brings certainty. The environmental and social impact studies were done by the World Bank which brings investor confidence,” said Dubey.

India is a natural market available to global solar investors. According to Dubey, the scale here was huge because of the Union government roadmap so global players know that “if they do not enter the Indian market this time they will miss the bus”. Though there is capital available across the country, Madhya Pradesh got cheaper tariffs despite having lower insulation than Rajasthan and Gujarat because of the project structuring, he added.

The state has also gone to the Central Electricity Regulatory Commission to get its petition approved even though the model bidding document of the Centre. The state is also looking to float more tenders for hybrid power projects and bring in a new policy for green energy.