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Green power producers say state utilities imposing charges, hampering green energy

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Economic Times
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Green energy producers say state utilities that buy power from them for sale to retail and industrial consumers are imposing too many charges on them, hampering the shift toward cleaner sources amid rising pollution levels in India's cities. The utilities reject the accusation. 

A large number of states aren't buying green energy and shying away from signing power purchase agreements with their generators. Some are levying at least four different types of charges on power produced by green companies, especially on those entering into direct power purchase agreements with industries. 

That's raising tariffs for green energy and threatening the country's ambitious capacity addition target, analysts said. 

"A large number of states utilities are levying cross-subsidy charges on companies that are directly tying up with clients for supplying power. This can be as high as Rs 2 per unit of power supplied, thus levelling the price differential advantages between utilities' tariff and green power prices," said Sunil Jain, CEO, Hero FutureEnergies. Some of the green energy producers say this is because they are taking away higher-tariff customers. 

"Cross-subsidy charges are levied because utilities claim they need to subsidise retail and agricultural consumers with higher tariffs from commercial and industrial consumers," said Sujoy Ghosh, India head, First Solar. "If power companies supply power to corporates and industrial consumers, then the power utility is missing out on the extra tariff they collect from this category of consumers that is passed on to agriculture and domestic consumers." 

The utilities reject the argument and say green energy is just too costly. "These days electricity is available from the power exchanges at a rate cheaper than solar or wind power," said a senior West Bengal State Electricity Distribution Co. executive who didn't want to be named. "This helps us reduce the tariff for consumers. We would rather buy cheaper power and reduce consumers' burden rather than buy pricey solar power although we meet out green power purchase obligation. Additionally, solar and wind power is erratic in supply adding to grid stabilisation issues."

Author: sustainabilityoutlook
Industry Term: Green Energy industry news