State-Government of Punjab has cited a fall in prices of solar components as well as lower borrowing costs and reduced corporate taxes to reorganize the solar tariff.

Punjab Govt Plans


Punjab is the latest state to seek revision of its solar energy tariff for a tariff of 4.50 per unit, which has been provided by Chief Minister Amarinder Singh’s government.

The state government has cited a fall in prices of solar components as well as lower borrowing costs and reduced corporate taxes behind the proposed step. Punjab’s decision is expected to compound the woes of the clean energy sector which is amid a logjam over contracts with Gujarat and Andhra Pradesh, and inordinate payment delays by states such as Telangana.

A communication issued by the Punjab State Power Corp. Ltd (PSPCL), “RE (renewable energy) power rates needs to be brought down to the level of average pooled cost of power @ 4.50 per unit worked out by PSERC (Punjab State Electricity Regulatory Commission) for 2020-21. As such, it is requested to reduce the tariff rate by at least 15%.”

PSPCL has been given the responsibility of power supply and production in Punjab. Thinking about power purchase agreements (PPAs) may raise doubts about the sanctity of the Indian legal contract, which is running the world’s largest green energy program. Also, mounting dues to generators threatens to dent the country’s image as a clean energy champion.

The head of a large Indian clean energy firm said, “Changing goalposts after the PPAs have been inked will impact investor confidence.”

About 4.7 trillion has been invested in the renewable energy sector in India in the last six years, with an expected investment of 1 trillion in a year by 2030.

As per the communication by PSPCL, “As you are aware, due to the restrictions imposed by Government on the movement of persons and working of the commercial establishments to control the spread of the Covid-19 pandemic, the economic activities have been severely affected all over India. These restrictions have directly affected the overall business activities including but not limited to reduction in demand for the electricity and ability of consumers to pay their electricity dues. This has led to severe cash deficit for the PSPCL.”



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