India's Adani signs PPA with SECI to supply 4.67 GW renewable power

India's Adani Green Energy Ltd (AGEL), a part of the diversified Adani group, has signed a Power Purchase Agreement (PPA) with the Solar Energy Corporation of India (SECI) to supply 4.67 GW of renewable power, the company said Dec. 14, and a government source said the price of the power is Rupee 2.49/KWh ($0.03/KWh).

The PPA is the world's largest for renewable power, the company claimed. The purchaser of the power is a state government in south India, the government source who did not want to be named, said.

A second source in the renewables industry said the PPA is for 25 years.

"The AGEL-SECI agreement to supply 4.67 GW is part of a manufacturing-linked solar tender of 8 GW awarded to AGEL by SECI in June 2020," the statement said, without giving further details.

A company spokesperson said the solar panels generating the power would be mostly manufactured locally and not imported, as part of the terms and conditions of the PPA.

Of the 8 GW bid won, so far AGEL has signed PPAs with SECI for a total generation capacity of close to 6 GW and it expects to sign PPAs for the remaining 2 GW in the next two to three months, the statement said.

"Following the proceedings at COP26, it is increasingly evident that the world has to equitably transition to a low-carbon economy faster than previously anticipated," Gautam Adani, Chairman of the Adani Group said in the statement. "This is why the Adani Group has committed $50-$70 billion of investment in the renewables space."

AGEL has 4.76 GW of solar plants in operation and 10.08 GW capacity is under construction, the company's website said. It also has wind energy and hybrid projects.

The manufacturing-linked PPA is significant as the Indian government has been encouraging local production of solar PV modules and wafers with incentives and customs duties to reduce dependence on Chinese imports amid rising renewable capacity expansions in the country.

Higher than lowest recorded price

This price of Adani's PPA may indicate a trend of strengthening levels since the lowest recorded price for solar power in India in 2020-21 was Rupee 1.99/KWh, according to the website of the Ministry of New and Renewable Energy.

PPAs between the power producer and the distributor generally span 15-25 years and are closely watched for their price trends. Many renewable projects in India are facilitated by SECI, a government body that acts as a facilitator between the power producers and the buyers who are generally government companies.

Of late, the PPAs are seeing new elements added to it to make them more secure for both parties such as legal protection in case either of the parties renege on the contract.

PPAs are the norm for selling thermal power as only small amounts of power are sold in the spot market in India.

India produced 1,381.69 TWh of power in 2020-21, of which 147.25 TWh was renewable power, data from Central Electricity Authority showed.