Power ministry allows bundling of renewable to replace thermal power under existing PPAs

The Ministry of Power and New & Renewable Energy have issued revised guidelines providing for thermal generation companies to set up renewable energy generation capacity either by themselves or through developers by open bids and supply the bundled power to the consumers under the existing power purchase agreements (PPAs).

This will enable the replacement of high-cost fossil fuel based energy with cheaper renewable energy under the existing PPAs. The gains from the bundling of renewable energy with thermal will be shared between the generator and distribution companies or other procurers on a 50:50 basis. As the renewable energy will be balanced with thermal energy, the DISCOMs will now need not acquire any separate capacity for balancing of renewable energy.

“This is a very significant step towards achieving the goal of 500 GW of non-fossil fuel capacity by 2030. The distribution companies will be able to count the renewable energy supplied under the scheme towards their renewable purchase obligation and this will be without the financial burden of separate PPA. This step by the Central Government will lead to a faster energy transition and will be beneficial for both the generators and the distribution companies,” read the power ministry statement.