The track is now clear for the Delhi Metro to switch to green power as the Rewa solar park in Madhya Pradesh is expected to soon start supplying electricity to India’s biggest city rail system
The Rewa solar park is ready to start supplying electricity to Delhi Metro Rail Corporation, less than a year and half since the 750 MW project made waves by promising to sell electricity at less than INR 3 (4 US cents) per unit. The Rewa project will eventually meet 90% of the power requirement of the Delhi Metro.
The solar plant in the central province of Madhya Pradesh that had marked a turning point in the bidding history of renewable energy in India is now functional. The bidding of Rewa Ultra Mega Solar Park in February 2017 culminated in record low solar tariffs that were the lowest ever awarded to a solar project in India through a bidding process at that time.
The park has started generating power from July, which will soon be purchased by the Delhi Metro Rail Corporation (DMRC). Currently, Rewa Ultra Mega Solar Ltd (RUMSL) is producing 10 MW of electricity. It is expected that DMRC will start purchasing the green power two months down the line at INR 2.97 per unit. DMRC is among the two top customers of the project, the other one being the state of Madhya Pradesh through the MP Power Management Co. Ltd.
“This is probably the first large-scale solar project in India that is supplying power to an institutional customer. It is accessible to an inter-state open customer, which is DMRC in this case,” Manu Srivastava, Principal Secretary and Commissioner, New and Renewable Energy Department, Government of Madhya Pradesh, and Managing Director of RUMSL, told indiaclimatedialogue.net. “The idea is that instead of imposing RPO (renewable purchase obligation) on discoms (electricity distribution companies) that are mostly in the red and forcing them to buy renewable power, why not extend it to willing customers who want to readily buy the cheaper power, which is in their own commercial interest?”
In keeping with that idea, Madhya Pradesh is preparing to establish a slew of solar parks with installed capacity of an additional 1.5 GW. The Indian Railways, another institutional customer, will be among the top clients.
The Rewa Ultra Mega Solar Park is also the first project in the country to receive a loan under the Clean Technology Fund at a low interest rate. Through the fund, the World Bank has chipped in with a loan at an interest rate of 0.25% to incentivise the project.
“We have also provided a level of credibility and a three-tier payment security mechanism that includes an innovative payment security fund and state guarantee that enabled the mega project. Because of our intervention, we have also reduced the penalty on delayed payments from 3% to 2.25%, thus making it attractive,” said Srivastava.
He added that optimum scheduling has been done in order to provide uninterrupted power supply to Delhi Metro on days without optimum sun. In this, the solar plant will provide energy to DMRC on a preferential basis to help meet its requirement and only then to the state utility.
The Rewa plant is playing a pioneering role and some of the innovative financial security measures are being adopted in contracts of other solar projects as well, officials said.
In the case of the Rewa solar project, a long-term vision of the state’s new and renewable energy department on financial risks also helped salvage the project from getting stuck.
“What we encountered in the case of Rewa was that Delhi Metro, which is the procurer, was very keen that the delivery point (of energy) should be Delhi. At that time, the policy issued by the government of India said that all interstate transmission (IST) of renewable energy would be free. However, the notification by the government had not been issued. We understood that it could be a risk. So we insisted on making Rewa the delivery point, so that if there are any IST charges that are imposed later, it is clear that risk for that rests with the Delhi Metro and not with the developer,” Srivastava told indiaclimatedialogue.net.
“Had we not done so, the project would not have taken off. Because the developers had bid thinking there were no IST charges, while the subsequent order issued by the government said that only the distribution companies were exempted from the transmission charges. It meant that Delhi Metro would have to bear the cost of delivery of power from Rewa to Delhi,” he said. “Because our risk allocation was appropriate, it ensured that the project survived.”
The 750 MW solar project was auctioned in three units of 250 MW each in February last year. Twenty solar power developer firms had submitted bids. Following 33 hours of non-stop bidding, Mahindra Susten, ACME Solar Holdings and Solengeri Power won a unit each by promising to supply electricity at record low prices. The project has come a long way since then.
It is expected that the 750 MW project, which is counted among the world’s largest single-site solar parks, will result in savings of INR 14 billion for the DMRC and INR 46 billion for Madhya Pradesh’s power utilities in the next 25 years.
According to the provincial government, in terms of carbon emission savings, the environmental impact of the project would be equivalent to planting 26 million trees.