OERC approves a PPA for 40 MW solar power

The Odisha Energy Regulatory Commission (OERC) has given a go ahead to Grid Corporation of Odisha (GRIDCO) and NHPC Limited’s power purchase agreement (PPA) for 40 MW of solar power at Rs 2.75 per kWh. Previously, GRIDCO submitted a petition with OERC, requesting permission to enter into a PPA with NHPC to obtain power from the said project. OERC has directed NHPC to ensure that the project is commissioned before April 1, 2022.

NHPC invited bids from engineering, procurement, and construction (EPC) contractors for the solar project. The project was expected to be constructed at Landeihil village in the Ganjam district of Odisha. The 40 MW project, with a capital expenditure of Rs 45.5 million MW, was awarded to Tata Power. NHPC then proposed to GRIDCO a levelized rate of Rs 3.07 per kWh for a period of 25 years to acquire power from the solar project. However, as per the reports, the project cost, interest on a loan, interest on working capital, quoted return on equity, and plant and machinery (P&M) prices, were all higher. Following that, NHPC proposed a new levelized tariff of Rs 2.75 per kWh. GRIDCO requested additional tariff reductions as solar energy was offered from the Solar Energy Corporation of India (SECI) at Rs 2.69 per kWh. NHPC, on the other hand, dismissed the motion, claiming that Rs 2.75 per kWh was a competitive and acceptable rate.

As per the OERC’s draft renewable purchasing obligation (RPO) regulations, the RPO target is 13.25 per cent. For the financial year (FY) 2021-22, this contains 7.25 per cent solar and 6 per cent non-solar. By FY 2024-25, the RPO target will rise to 18 per cent, with 9.75 per cent solar and 8.25 per cent non-solar. To reach its RPO targets, GRIDCO must purchase 1,014 MW of solar power and 479.15 MW of non-solar energy totalling 1493.15 MW to date. Therefore, it will need additional solar energy to achieve its RPO targets.

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