Farmers wanting to set up solar plants in for a shock

Amaninder Pal

Tribune News Service

Chandigarh, February 23

The state’s plan of encouraging farmers to set up solar power plants in their fields has run into rough weather after the Centre slashed the share of solar power in the state’s total consumption from 10.5 per cent to 8 per cent.

The worst sufferers are around 280 farmers who have already paid heavy amounts as processing fees to set up plants. They are now facing uncertainty about the fate of their venture.

Notified on January 28, the revised policy has put Punjab State Power Corporation Limited (PSPCL) and the government in a position where the power utility can’t buy power from the yet-to-be-commissioned plants at prices quoted by their owners.

Such units would sell power at rates between Rs6.25 and Rs6.99 per unit, which is double the average rates the PSPCL purchases power from other sources.

The government is thus left with two options – either to compensate the PSPCL the extra amount that the power utility will pay to solar units or simply put off the scheme.

The agitated farmers today landed at the headquarters of the Punjab Energy Development Agency (PEDA) – the executing agency – demanding justification behind the delay in execution of agreement between them and PEDA.

Earlier, the Centre had mandated that each state should be generating 10.5 per cent of their total power consumption from solar plants by 2020. This component is termed as renewable purchase obligation (RPO). In January, the limit of RPO was slashed to 8 per cent.

Punjab was earlier bound to install solar plants of 4,772 MW by 2020, the target was reduced to 2,552 MW. Since the solar power costs almost double, the PSPCL has the right to compensate the difference by charging slightly more from its consumers. But the share of solar power should not cross the RPO limit.

If Punjab allows such solar plants to come up, the PSPCL will not be able to compensate itself with this methodology. The question now is who will bear the differential cost.

“The RPO has been slashed to 8 per cent. We have apprised the government of the changed scenario. Now it is up to government to take a call,” said Anirudh Tiwari, secretary, Department of Power, Punjab.

MS Randhawa, a farmer, said: “PEDA is delaying the issuance of agreement letters. Despite this, we (farmers) have to sign a power purchase agreement with the PSPCL before March 31 otherwise our bidding will stand null and void.”

What the revised policy means 

The state had planned to install solar plants of 4,772 MW by 2020, but the target has been reduced to 2,552 MW after the new policy. This lowered the state's commitment to set up new solar plants.

Its implication on farmers’ solar plants 

If the state allows farmers to set up solar plants in excess of its given limit, the PSPCL will not be able to compensate for costly solar power by charging its consumers. The question now is who will bear the differential cost.