UPPCL Seeks Approval for 500 MW Solar Power Procurement at Rs 2.60/kWh to Meet Rising Demand in Uttar Pradesh

UPPCL seeks approval for the procurement of 500 MW of solar power at Rs 2.60/kWh to meet Uttar Pradesh's rising energy demands and comply with the Renewable Purchase Obligation. Learn more about this long-term solar initiative.

The Uttar Pradesh Power Corporation Limited (UPPCL) has filed a petition to approve the procurement of 500 MW of solar power under a 25-year long-term agreement. This procurement will be sourced through a tariff-based competitive bidding process under the Solar Inter-State Transmission System (ISTS) Tranche XI Scheme. UPPCL aims to meet the growing power demand in Uttar Pradesh and fulfill the Renewable Purchase Obligation (RPO) set by the Ministry of Power.

Solar Tariff Fixed at Rs 2.60/kWh by CERC

In a significant decision, the Central Electricity Regulatory Commission (CERC) has set a tariff of Rs 2.60 per kWh for the 500 MW of solar power to be supplied by three solar power developers (SPDs) to UPPCL. This rate was determined through the competitive bidding process and is aimed at ensuring cost-efficient solar energy procurement. The CERC's order, dated May 13, 2024, also includes agreements between UPPCL and the Solar Energy Corporation of India (SECI) under this scheme.

Trading Margin and Payment Security Conditions

The commission approved a trading margin of Rs 0.07 per kWh for the power supplied through SECI. However, this margin could drop to Rs 0.02 per kWh if SECI fails to provide adequate payment security, such as an escrow arrangement or an irrevocable, unconditional revolving letter of credit to the solar developers. This condition ensures financial security for developers while protecting consumers from higher costs.

Future Recommendations for Power Procurement

The CERC has approved the Power Supply Agreement (PSA) and Supplementary Power Supply Agreement (SPSA) between UPPCL and SECI, finalizing the procurement process. Additionally, the commission has advised UPPCL to negotiate lower trading margins in future long-term power procurement agreements to reduce costs and pass on benefits to consumers.