Gujarat files petition to cut solar power tariffs by about 25%

Greentech Lead India: The state of Gujarat, which owns half of nation’s solar power plant capacity, is looking to cut the rates it pays to projects.

Gujarat Urja Vikas Nigam, the state agency that buys solar power from producers, has submitted a petition to cut the tariffs, citing solar plant owners are making  “unjustified and windfall gains”.

According to sources, the agency has filed petition to reduce the tariff to about 9 rupees per kilowatt-hour, compared to the average 12.54 rupees over 25 years under current contracts.

If approved, the move will affect several solar power producers in the state including Adani, which owns the largest share in Gujarat solar market. The company has commissioned solar energy projects of 40.11 MW in Kutch, surpassing its allotted capacity of 40 MW.

It will also affect companies like Moser Baer, Tata Power and Welspun Energy with whom Gujarat Urja Vikas Nigam has signed power purchase contracts. In total, Gujarat Urja Vikas Nigam has signed 88 contracts for a total of 971.5 megawatts of solar capacity.

As of March 2013, Gujarat has commissioned over 852 MW of solar plants. Overall there are 77 solar energy producers that contributed for the 852.31 MW capacity in the state of Gujarat.

The petition is filed on the premises that the cost of building the solar plants was unexpectedly lower than what was envisaged when the tariff was fixed.

The industry has expressed its concern over the petition and said it will question the consistency of the state’s policy. The tariff revision is likely to affect investor sentiment in India, according to industry sources. Several banks are already concerned about these policy risks in India.

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