Solar Power PPA to be made more bankable

It looks like the power purchase agreements (PPAs) between solar power developers and the trading arm of NTPC, NVVN, could get further delayed because the Government is still working out mechanisms to make these agreements more bankable.

Certain issues like payment security mechanism remain to be addressed before the guidelines for inviting EoIs are notified. Industry feels that the balance-sheet of NVVN (NTPC Vidyut Vyapar Nigam) may not by itself lead to the bankability of PPAs. Hence, the possibility of setting up a risk guarantee fund is being considered.”

Once the issues are resolved, the Government will notify the guidelines for the purpose. Expression of Interest will then be called for for procuring solar power from project developers. The project developers offering the best discount on a tariff notified by the Central Electricity Regulatory Commission (CERC) will figure higher in the pecking order during the allocation of identified projects under the Solar Mission programme.

This arrangement of allocating projects on basis of discount on tariff by project developer (other terms & conditions will also come into play)may call for developers to cut margins or integrate EPC and solar module manufacturing (highest cost component of the system).   Does an  integrated play seems the bet in this scenario? But developing expertise across divisions may not be easy and is a time consuming process; especially in solar which itself is a new field for India.  Few players in India are working on this strategy.

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