1123723, 100M ‘why shouls India Respect Sanciy of Power Purchase Agreements (PPA)? COUNCIL ON ENERGY, ENVIRONMENT AND WATER Connecting Dots latest How can the Sanctity of Power Purchase Agreements be Maint: (dogsiwar ‘Stategovert ——Ins and power sellers have chosen to interfere with the PPAs when suitable to their interests setlement (Blgs/whatie powergid- setlement security. grideysten-ascurty: ind) ni) (dogsihow canna pump. Irigaion- (bloge/howeea fndmake- indasosleole sector makeagicuture Micro Solar fhesebtee- secorsiesetoety- Pumps to bp2028) 2028) ((bogstar fees pura reasonswhy-(ologetormtneriee what keepe farmers. purjbzeasonshy- Malna’s stubble) stubble) Harsha VRao 01 March 2022 fv in wo (htps//v1adethis.comvlve/rediect/? Urlemaito%3a%3Fbody3Ohtins%:253A%252°%262F wu. ceew nke252Fblogek252Fwhy- + of power: purchase- agreements- In november at yar, hE PRAWBDHEnewable Energy Security Refcm, Termination and Redetermination of Power anf ill was tabled before he state legislative zsembhy renewing the sFAGIAZOR LE 20S eal cSna ARH ZORUSA ora WARE PORE ARRAN aaa EONAR ARANP Urch ase respecte tact nr cRRBIAA ARAB oer es: cevintereenlenetgy sea) ond ap In cca’ easy waste. ‘wp&persundefinedspeo=tbxe 300) Why are PPAs important? ‘power purchase agreement (PPA) is egaly enforceable contrac signed between a buyer and slr of electricity. Contract terms are changeable in thee ways: hough contractual ems; trough neguatons bythe parts; ra per aw. Recent actions by both the Lion a state governments have departed rm contact aw princi and set precedents for such interferences inthe fut. These precedents can havea ripple eect onthe renewable enegy sector and could potential dampen investor Confidence. Investor prefer supporting bankable project contract (., lenders wl be wiling to ance the project basi the primary project entact) an the PPAis the ‘ental project contract nthe electri act, AA third party cannot enforce or modify a PPA hitpsiwww.ceewiniblogsiwhy-shouldndia-respect-sancily-of-power-purchase-agreements-in-enewable-energy 11123723, 100M why shoule India Respect Sancty of Power Purchase Agreements (PPA)? In June 201928 a esponseto distribution companies (scone) not maintaining letters of re.) {ypicalyrequiredin PPAS for payment secur he Ministry of Etower (wor) acted =Tnps//powerin govin/stes/detouh/les/webforminotices/Opening_and maintarig_ofx20adequate Lever ofCredi_as Payment Security Mechanism. under Power Pur los spate ceties (LDCS or the id operator) to sched and dspeBOUMOALE CIN EHERGNTENY RONMEN ERNE WHER AY 2027, the MoP nti the Ehedtict? (Late Payment char) Ful (tb /owarnin. goin seats SesrGrewOMSNRAU REHOME cated, 22.2 201 pf wich eecaty Mpegs essing Pra tater peponed amen DSS isecimsonmes on Pec otePomen Surcharge Amendment uk. 20 a esr lowing {@S bverto athe pany incase of continued default by the buyer notithstanding the relevant provision to th ellect in he PPA, Busine ies: spite elaine (aderessing investor concern) undermine contract sanity since they effectively give athietparty (he LOC ia tie age) the esponaiiiy to enforce the contract, rte Bava rein anette pate tg othe Anda rode etry Rept Commision APC) so ta nes mechanism deviation Spoeghtoeunle G60, he Puichgdhenient approved and abe bill efreitslepisative assembly that Yetminats” tail rated clauses in certain hema and ent alcrtecrtbe Puja tae Naetatyagulatory Commission PSERC to redetemine the taf of concluded PPAS. ‘Thedirnj sogrtdyotamsatetnplonseintsigavernment inthe regard ~ geting the tafe were untlthe pendency of ates and ndzaing inno uncertain terms, the oan distin the cscoms. cannot ceek:o getaway trom contracts just because they become expensive to perform. Wha publi interest rgument canbe there is rote signicant pub interest neepecting the sanctity ofthe canvas Ha we “Tenchiajesssndemate ols the state goverment, the Union govenment, discoms, the power ele have chat tointrere with the PPAS when suitable to ‘hewn egotangtenkaias acSexaayantaplction of ules will cea presitabliy and certainty essential frincresses investments towards clean ener3y ‘wostoon, So heaeapiouuetions: Miro Solar Ahesettee- secorciesttrony- Pumps to ‘Sedbeayme apeipa expensive HPs helpe cee the RE sucess stry nied. They must be compencated fal forthe eke though budgetary allocations, dil ojetenegoiationsorinovatv taf designs. nasi Jlies must e carly designed otha hey an san the test fin. wi special be inportant for newer tel ie eee pei rie detailed guidance on procedures for enty ccs rom PAs, This hold ince commercial pects, resource adeqany. ‘camorittemvrir asin eli te aaa. rift ead, Docs must have ele power procumen poole. 25 er conic must be ceased stat thy en je the oad sscoms must sign PPAs based on robust eeoure adequacy plans so that hey ae not eae with oe ee + tnthe ng tem, ei mechanisms for contract enforcement must be strengthened so thet spgrieved partes donot seek extrajudicial remedies. Tis includes building capacity in ERCs and redcing the time taken to depose of cases. ‘asa VRao(htips://mw.ceemivharsha-v 120) 2 Research Analyst at The Council on Energy, Envranment and Water (CEEW) Send your comments to haraharaoBceewin mailoharcha aogceew.in) Fenewables(renewableenergyresearch) Power Sector /powersecor) (a a ‘Sign up for the latest on our pioneering research Name Email sussca ‘ortact Us Yeomaetu) tps: www. ceew niblogs!why-shouldndia-respect-sancily-of power-purchase-agreements-in-enewable-eneray 201123723, 100M why shoule India Respect Sancty of Power Purchase Agreements (PPA)? incr Evert evens) Bisa room ymeciazoom) eet our Team outear) Stor Boursten) INTEGRATED INTERNATIONAL NDEPENOENT orbonttecting Dots aodallgst nga npc) Publestans (pu Wes Storie hp ioxtneo-stre/erlsode-tarracing por Aoods) igre rmceawantacesotelinateveiince) als Sete (2 fiero) Proms etenete) rtm Cope dened friahity oreo) LEE re ls SEY aap Os ei) canine tinea landndsste) BR rayne) pase jw ceuwieet) oiavieer ug/oss/howecan- ‘ndmeie- indasoslewols aye aE cae Up labors. ented Maro Solar lesion vamtgaizeeory Pumps to by20es) 2029) {1911 ors 00 ea o1-40735900 eran Pong sitscerwin pun reanntplrseedaceeer each SER sR NEHLRFEn ‘Enal Select Newsletter ‘CONNECT WITH CEEW in (toed mune comeompanyfounet- fw fre bupwrbieareeonininanlcaionschAaewatthapeent (ips Dee donttetianaBAada7am con/ceoia) «© 2022 CEEW, allah reseed, hitps:www. ceew niblogs!why-shouldndia-respect-sancily-of power-purchase-agreements-in-enewable-ensray COUNCIL ON ENERGY, ENVIRONMENT AND WATER a