New Delhi-based renewable power producer Azure Power has announced it has closed power purchase agreements (PPAs) for the electricity to be generated by 600 MW of the 4 GW of solar generation capacity Azure secured in a manufacturing-linked project tender.
Under the terms of the 600 MW deal, Azure will receive INR2.54/kWh ($0.034) from the state-owned Solar Energy Corporation of India (SECI) over a 25-year period.
The grid-connected solar projects concerned will be built in Rajasthan, the state which boasts India’s highest level of solar radiation. Grid connection has been approved and the land is under acquisition with the projects set to be commissioned by December 2023.
Azure had secured an initial 2 GW of solar capacity in the SECI tender by committing to establish new solar cell and module production lines able to produce 500 MW per year of solar products. The developer was then granted a further 2 GW of solar project capacity under what has been termed a ‘green shoe‘ arrangement, in reference to the stock market practice of having the option of selling extra stock at a company float to exploit unexpected demand.
SECI had previously guaranteed a purchase price of INR2.92/kWh ($0.039) for the electricity to be generated by the Azure capacity but reduced the terms after subsequent solar tenders attracted a lower price for solar power.
Ranjit Gupta, managing director and CEO of Azure Power welcomed the power purchase deal, saying: “This is a significant milestone, given the long wait. With things now falling into place, we are on our way to see our 4 GW pipeline turn into contracted capacity and help us realize significant value accretion for our stakeholders. We understand SECI is progressing to tie up power sale agreements (PSAs) for further capacity in the tender and we expect to sign PPAs when the corresponding PSAs are in place.”
Azure recently announced it had received the letter of award from SECI for its first, 150 MW, grid-connected, solar and wind hybrid power project. That facility will benefit from a 25-year PPA at a fixed tariff of INR2.35/kWh ($0.032). The hybrid plant – which will feature 100 MW of solar capacity and 50 MW of wind turbines – is part of a 1,200 MW mixed technology tender carried out by SECI. The project will have to be commissioned within 18 months of signing the power supply agreement.
