Wind generators demand pay guarantee mechanism

In a letter to Union Minister of Power and New and Renewable Energy RK Singh, Indian Wind Power Association has welcomed the ministry’s move for making it mandatory for distribution licensees like Tangedco to open and maintain the adequate letter of credit (LC) as payment security mechanism under power purchase agreements.

Stating that this move would have the beneficial ripple effect of bringing in all round fiscal discipline, IWPA chairman Prof Dr K Kasthurirangaian said that the order issued by the ministry pertains mainly to thermal power plants. “Accordingly, we would request you to kindly consider issues of a suitable payment mechanism for wind energy generators also. We shall be happy to extend our help and cooperation to work in coordination with the Ministry of New and Renewable Energy in the framing of such a policy appropriate to the wind energy industry,” he said.

Pointing to the considerable and inordinate delay in payments by Discoms for power supplied, he said that the delay is as high as 22 months in Tamil Nadu, seven months in Andhra Pradesh, Maharashtra and Rajasthan. “Even so, wind energy generators continue to contribute to the energy requirements of the states they are located in. For example, in Tamil Nadu, as per the State Load Despatch Centre records would reveal, on an average, 24 per cent of energy consumption is currently met through wind energy,” he said.

The government aims to make states accountable for the financial condition of their electricity distribution companies through its latest rules enforcing a mandate of bank guarantees for access to power. They expect the move, which causes an imminent threat of power cuts in several states if discoms are unable to provide such payment security come August 1, will trigger a long-needed turnaround in operations inthis sector.