NEW DELHI: A grey market for grid interconnect facilities has emerged in the solar sector as installation of projects outpace expansion of grid interconnect and transmission infrastructure. Smaller players are exploiting this mismatch by booking interconnect capacity for reselling at a hefty premium of Rs 40 lakh per MW (megawatt).
Industry executives said these players book the grid interconnect, or ISTS (interstate transmission system) capacity, the moment bookings open. But they have little or no intention of setting up solar projects. Some of them hold on to the capacity by installing only a small part of the promised project.
For example, 80% of the 40 GW interconnect capacity expected to be commissioned next year has already been booked. The executives suspect that a majority of the 8.8 GW (gigawatts) capacity in the Fatehgarh and Bikaner interconnect corridors in Rajasthan, the largest hubs in India, have been booked by such players.
The situation has led to the underutilisation of the existing green corridors, while serious developers get stranded with their projects since they are unable to tie up consumers in the absence of a grid interconnect or wheeling capacity.
“Securing interconnect capacity from the grey market can affect project viability because of the substantial additional costs,” means taking a huge financial hit, which can affect the viability of projects,” one executive said. Interconnect capacity bought from the grey market for a 1,000 MW project can entail an additional expenditure of Rs 400 crore or so, he said.
Interconnect capacity is currently allotted under three modes: LoA (letter of award of a project), land availability, and/or BGs (bank guarantees). Allottees are allowed to convert to another at a later stage. It is mostly the land- and bank guarantee-based allotments that being misused by developers.
Nine developers were some time back served notices for revocation, which is likely to be appealed at the regulatory level. Some have invoked ‘force-majeure’ clause to delay the revocation.
Industry executives said these players book the grid interconnect, or ISTS (interstate transmission system) capacity, the moment bookings open. But they have little or no intention of setting up solar projects. Some of them hold on to the capacity by installing only a small part of the promised project.
For example, 80% of the 40 GW interconnect capacity expected to be commissioned next year has already been booked. The executives suspect that a majority of the 8.8 GW (gigawatts) capacity in the Fatehgarh and Bikaner interconnect corridors in Rajasthan, the largest hubs in India, have been booked by such players.
The situation has led to the underutilisation of the existing green corridors, while serious developers get stranded with their projects since they are unable to tie up consumers in the absence of a grid interconnect or wheeling capacity.
“Securing interconnect capacity from the grey market can affect project viability because of the substantial additional costs,” means taking a huge financial hit, which can affect the viability of projects,” one executive said. Interconnect capacity bought from the grey market for a 1,000 MW project can entail an additional expenditure of Rs 400 crore or so, he said.
Interconnect capacity is currently allotted under three modes: LoA (letter of award of a project), land availability, and/or BGs (bank guarantees). Allottees are allowed to convert to another at a later stage. It is mostly the land- and bank guarantee-based allotments that being misused by developers.
Nine developers were some time back served notices for revocation, which is likely to be appealed at the regulatory level. Some have invoked ‘force-majeure’ clause to delay the revocation.
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