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Solar Firms Urges Law Minister To Review Punjab Renewable Energy Tariff Bill

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The National Solar Energy Federation of India (NSEFI), a lobbying group for solar companies, has written a letter to Union Law and Justice Minister, Kiren Rijiju to reconsider the Punjab Renewable Energy Security, Reform, Termination, and Re-Determination of Power Tariff Bill, 2021.

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The Punjab State Assembly passed the bill on November 11, 2021, and the Punjab Governor has sent it to the President of India for his endorsement. The bill aims to lower tariffs for renewable energy projects that have been licensed by the state’s electrical regulatory body.

According to the NSFEI, if the President signs the bill, it will undermine the renewable energy industry. The companies were hampered by the Punjab state legislature’s passage of the bill.

Punjab has approximately 900 MW of solar power installations in operation, with a total investment of close to Rs 7,000 crore. Long-term power purchase agreements (PPA) with a set tariff provide a return on this investment. 

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According to the Federation, the Bill will make renewable energy projects unprofitable and put a negative financial outlook on the sector. Hundreds of people who are involved with these projects will be affected and rendered unemployed.

It went on to say that the Bill raises numerous constitutional and legal issues and that if it is signed into law by the President and implemented, it will be tremendously devastating to the sector and will have a negative impact on investor enthusiasm in renewable energy power projects.

The bill, according to the NSFEI, violates the Electricity Act of 2003, as well as the National Electricity Policy of 2005 and the National Tariff Policy of 2016. 

NSFEI expressed that bill’s passage will jeopardize India’s objective of 500 GW of renewable energy by 2030 and will have an influence on future investments in Punjab, as well as investments across India, because other states may follow suit.

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It went on to say that, such terminations and price redeterminations will have a negligible influence on the cost of power purchased by the state because renewable energy makes up a minor part of Punjab’s energy mix, 

Tariffs discovered through the competitive bid procedure, as per the industry association, must not be tampered with. Any cancellation of PPAs or renegotiating of tariffs would be a breach of contract and would have a negative impact on the developer’s capacity to repay loans.

The letter says PSERC shall establish a temporary tariff that will be in effect until the final redetermination of the tariff, and all Rules promulgated pursuant to it shall take precedence over all other State Laws.

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