A low-key Navratna PSU, Solar Energy Corporation of India (SECI), finds itself in the middle of a storm following the indictment of billionaire Gautam Adani and others by the American Department of Justice (DoJ) and the Securities and Exchange Commission (SEC).
The central public sector unit is the government’s implementing agency for solar, wind and hybrid projects as well as green hydrogen.
SECI releases tenders for selection of renewable energy (RE) developers on a pan-India or state-specific basis through tariff-based competitive e-bidding.
Once selected, SECI enters into a 25-year power purchase agreement (PPA) with the chosen bidder (developer) to procure power. It also signs 25-year power sale agreements (PSA) with discoms or other buyers for selling the power it procures. It also builds renewable energy capacities through its investments but power trading is one of its primary roles after floating tenders. SECI traded approximately 43,000 million units of renewable energy in 2023 alone, its website says.
It also has plans to launch an initial public offering (IPO) within a year or two, chief managing director RP Gupta.
Renewable power’s demand problems
SECI’s apparent inability to find buyers in states for 15 GW of solar power produced by Adani Green Energy and Azure Power Global was the trigger for the alleged $250 million (Rs 2,100 crore) bribery scheme for state officials, according to the indictment documents.
The allegations have put the spotlight on the issue of unsold renewable power, especially solar. SECI has at least 6,500 MW of unsold renewable power. This is because with more deployment of renewable energy, the cost of power has decreased over the years. This has made power produced from older renewable energy assets relatively expensive.
Over the past decade, solar power tariffs in India have seen a significant drop from a peak of over Rs 17 per unit in 2010 to about Rs 2.5.
In 2019-20, when SECI was unable to find buyers for the Adani-Azure solar power, as claimed by SEC, the average cost was about Rs 3 a unit. As a result, selling power from old renewable projects is becoming increasingly difficult, as tariffs are far lower for the new projects.
Due to better prices available, distribution companies (discoms), which are already financially strained, either are unwilling to sign power supply agreements (PSAs) with procurers such as SECI or negotiate heavily for power procurement from old RE assets. Consequently, SECI fails to sign power purchase agreements (PPAs) with the RE developers.
“To resolve the issue of lack of power purchasers, the central government should actively consider implementing a uniform tariff for renewable energy, which could be revised sector wise (wind, solar, hydro) on a monthly basis," a senior executive of an energy firm told Moneycontrol on condition of anonymity.
Similar model for green hydrogen
SECI is also the nodal agency for the National Green Hydrogen mission. It has awarded contracts for setting up 412,000 metric tons of green hydrogen production capacity as well as a 1.5 GW electrolyser manufacturing capacity under the National Green Hydrogen Mission.
“For green hydrogen as well, SECI is one of the nodal agencies where it will bundle green hydrogen production from different developers and ensure off-take to them. This case now raises concern that any entity could resort to a similar scheme if off-take agreements are not adequate or as per market rates,” said a senior official from one of the first movers in India’s green hydrogen sector.
SECI is the implementing agency for green ammonia production and supply-demand aggregation and disbursal of incentives. The capacity available for bidding under Tranche I is 5,50,000 MT per annum of green ammonia.
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