Why Utilities In Andhra Pradesh, Karnataka Are Shunning Solar Power
Solar power producers have run into a problem in Karnataka and Andhra Pradesh. While they are willing to generate electricity, utilities in the states aren’t keen on buying from them.
As many as five solar power plants in the two states are facing revenue and generation losses due to grid curtailment, when grids or utilities refuse to purchase power, according to a letter written by a lobby of solar power producers.
BloombergQuint reviewed a copy of the letter sent by the National Solar Federation of India to Karnataka Power Transmission Corporation Ltd., Transmission Corporation of Andhra Pradesh Ltd. and secretary of the Ministry of New and Renewable Energy.
“Renewable energy should get first access to grid, so it needs to be technically verified that curtailment is happening despite the regulation,” Jasmeet Khurana, manager for mobility at World Business Council for Sustainable Development in India, told BloombergQuint over the phone. “If they aren’t getting (grid access), then that’s an issue.”
Unlike thermal power plants in which fixed costs are recovered through fixed charges, power purchase agreements by solar power developers are signed over single-part tariffs. Back-downs lead to financial losses, threatening the project’s viability.
The state load dispatch centre in Bengaluru, the letter by power producers said, has been giving instructions to “back-down”, or curtail production to the projects despite them being granted “must-run” status—or the right to be first integrated into electricity grids and the last to be curtailed from them—under Karnataka Grid and India Electricity Grid Codes.
The solar power projects in Karnataka that are facing grid curtailment, according to the federation, have been commissioned under schemes of the National Solar Mission. The schemes are:
- National Solar Mission Phase-II Batch-III Tranche-V.
- Pavagada Solar Park under National Solar Mission Phase-II Batch-II Tranche-I state specific bundling scheme, which has power purchase agreement with NTPC Ltd.
- A scheme that generates 1,200 MW of solar power through smaller units of 20 MW each in 60 talukas. It was tendered by Karnataka Renewable Energy Development.
The solar power projects are managed by Wardha Solar (Maharashtra) Pvt. Ltd in Kallur, Madhuvanahally, Yatnal, Nalwar and Maskal; Parampujya Solar Energy Pvt. Ltd. in Kallur; and Adani Green Energy Ltd. in Holenarsipura.
Queries emailed to Karnataka Power Transmission Corporation, Transmission Corporation of Andhra Pradesh and Adani Green Energy remained unanswered.
Solar power projects commissioned under 1,000 megawatt Kurnool Ultra Mega Solar Park have also been facing grid curtailment since January, according to a separate letter written to Transmission Corporation of Andhra Pradesh.
The average back-down—or halting of production—of renewable energy was 3.67 hours in 17 days in June in Karnataka, according to the National Solar Energy Federation of India. Wardha Solar’s 40-MW solar power project in Nalwar faced a curtailment of power for 9.78 hours on June 13—the highest in the month.
The federation also said the total breakdown loss of solar power plants in Andhra Pradesh due to curtailment was 3.87 lakh kilowatt-hours between January and June. Curtailment of solar power was nearly 1 hour 31 minutes on June 10, it said.
Both the letters said the state load dispatch centres can’t curtail renewable power at their convenience, especially for commercial reasons. “Backing down of the ‘Must Run Status’ power shall be resorted to only after exhausting all other possible means of achieving and ensuring grid stability and reliable power supply,” the letters said.
Subrahmanyam Pulipaka, chief executive officer of National Solar Energy Federation of India, told BloombergQuint over the phone that load curtailment was virtually on a day-to-day basis. “In Karnataka, we have more than 12-13 projects having capacity of up to 130 MW where load curtailment on any given day was at least 0.6-0.8 hours.” In many situations, the curtailments were despite grid failures, he said.
According to Khurana, the risk of curtailment was higher for older projects due to their higher tariffs. “There’s a fiscal incentive for discoms to curtail power from projects with higher tariffs.”
Pulipaka said grid curtailments can dent revenue of solar producers by 10-15 percent. Curtailments are usually planned in advance but there have been instances when they were arbitrary too, he said. The phenomenon, according to him, is widely prevalent in Telangana and Tamil Nadu, and in Andhra Pradesh, Rajasthan and Madhya Pradesh to a lesser extent.
The producers are seeking to record the reasons for the grid curtailment and sharing it with them in writing. They want state utilities to undertake curtailment only after exhausting the option of backing down of conventional power plants.
Grid curtailment tends to be higher in countries with rapidly growing variable renewable energy, Kameswara Rao, partner (energy, utilities and mining) at PwC, told BloombergQuint over the phone. As a safeguard, generators should factor in these losses in the initial years of operation, he said.
“The level of curtailment will reduce as utilities add more transmission interconnection capacity and as dispatchers use more automation to balance the system,” Rao said. “Investment in energy storage at the grid level and better forecasting can also reduce curtailment.”