Third Party Sale
In India, a lot of consumers are keen to opt for “Renewable Energy” especially Solar or Wind. For such consumers, mostly the energy intensive consumers, there are many ways to procure power, and one such way is where a power supplier or a vendor gets into a Bilateral – Power Purchase Agreement (PPA) to sell Solar / Wind power to such facilities.
In such a scenario the power supplier is called a Solar / Wind Independent Power Producer (IPP) and the mechanism for power sale is termed as 3rd Party Sale of Power. Here the supplier brings the capital, commissions, operates & maintains the power plant and then bills the consumer for the sale of power. This acts as a win-win situation for both the parties.
This mechanism for 3rd Party Sale of Power allows consumers with connected load greater than 1 MW to choose their own supplier of power i.e., they are not restricted to buying power from the utility and can instead buy power from any 3rd party Independent Power Producer (IPP) at a much cheaper PPA rate. Such a consumer can contract with a Solar / Wind IPP to buy power generated from their Wind or Solar PV power plant.
Unfortunately, this Power Purchase Agreement (PPA) is not as straight forward as it sounds. So where is the complexity?
As per electricity laws in India, electricity is a regulated commodity. Hence there are rules for selling this commodity. A consumer may sign a third party PPA. There are however scenarios such as Open Access regulations which govern the sale of power. The Open Access regulations mandate certain charges which may differ from state to state as may be defined by their respective State Electricity Regulatory Commissions (SERC’s).
Due to such various charges and regulations involved in the procurement of power from 3rd party power developers, we recommend a careful estimation of the landed cost (total cost to obtain the power at your distribution board) before deciding on procuring Solar / Wind power from a 3rd party IPP.
To know more about “3rd Party Sale of Power”, please send us details of your inquiry.