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Punjab State Power Corporation Limited (PSPCL) has sought approval for the adoption of tariff and power procurement from 400 MW grid-connected solar power projects located within Punjab. As a distribution licensee, PSPCL is mandated to procure renewable energy under the Electricity Act and the Renewable Purchase Obligation (RPO) regulations. The company issued a tender in May 2023 for 1,000 MW solar power procurement, following guidelines set by the Ministry of Power. The bidding process followed a structured approach, including an e-tender and an e-reverse auction. The initial minimum capacity per bidder was 50 MW, later revised to 5 MW, with multiple deadline extensions due to amendments and bidding requirements. The ceiling tariff was initially set at Rs. 2.75/kWh, then increased to Rs. 2.85/kWh, and later to Rs. 3.00/kWh. Despite multiple bidding rounds, only one bidder, SAEL Industries Limited, submitted a bid for 400 MW at Rs. 2.99/kWh. After negotiations, SAEL agreed to reduce the tariff to Rs. 2.97/kWh. PSPCL submitted its petition to the Commission, justifying the procurement under its RPO obligations, considering Punjab’s increasing renewable energy targets. The Commission assessed whether the tariff was determined transparently and complied with bidding guidelines. PSPCL provided supporting documents, including the bidding process, tender publications, and evaluation reports. The Commission noted that adequate time was given to prospective bidders and that the bidding process adhered to regulatory requirements. The Commission approved the tariff, considering various factors such as the necessity of procurement, cost reasonableness, and compliance with government policies. The discovered tariff of Rs. 2.97/kWh was found competitive compared to inter-state solar power procurement, where additional costs such as transmission charges and trading margins could increase the final cost. By sourcing power from within Punjab, PSPCL also avoids blocking interstate transmission capacity, which is crucial during peak demand periods like the paddy season. Further, a recent Ministry of New and Renewable Energy (MNRE) notification mandates the use of an Approved List of Models and Manufacturers (ALMM) for solar modules and cells in new projects. However, since PSPCL’s bid process was completed before this notification, the discovered tariff remains unaffected by this requirement, making the procurement more cost-effective. The Commission also emphasized the importance of having a diversified energy portfolio to ensure grid stability and efficiency. While the Commission approved the procurement arrangement for 400 MW solar power for 25 years, it did not approve the other terms and conditions of the Power Purchase Agreement (PPA), which are to be mutually decided by the contracting parties. The decision aligns with Punjab’s renewable energy targets and the broader goal of reducing reliance on conventional power sources. PSPCL’s petition highlighted the need for renewable energy expansion in Punjab and the challenges in attracting multiple bidders despite multiple rounds of bidding. The approved tariff supports PSPCL in meeting its RPO targets and securing a stable supply of renewable energy. With this decision, Punjab moves closer to enhancing its clean energy portfolio and ensuring a sustainable energy future for the state. |
