State-owned electricity distribution utilities (discoms), which refuse to lift and pay for ‘high-cost’ power from solar developers in violation of the relevant laws, policies and purchase agreements, will now come up against a quasi judicial order. Setting aside a March 2019 order of the Tamil Nadu electricity regulator, the Appellate Tribunal for Electricity (Aptel) ruled that curtailment and back-down on renewable power purchases by discoms for reasons other than grid security is untenable.
The tribunal also directed that state power regulators across the country and the pan-India load despatch body POSOCO to abide by the rule, “till such time the Forum of Regulators or the Central Government formulates guidelines in relation to curtailment of renewable energy”.
TN-based solar projects Phoebus, Aadhavan and Adityashakti and Wardha Solar’s Nalwar Project in Karnataka are believed to be among the immediate beneficiaries of the tribunal order, upholding the concept of ‘deemed generation charges/compensation’ and the must-run status accorded to solar units.
The state power utility’s move is seen to be in violation of the Section 86 (e) of the Electricity Act 2003 and state’s own solar energy policy unveiled in 2012.
As reported by FE earlier, a clutch of under-construction solar projects with combined capacity of 18,000 MW is facing grim prospects with the state-run discoms developing cold feet on buying power from these projects, at tariffs discovered under auctions. The discoms’ reluctance to sign power supply agreements with these projects, with aggregate investments of up to Rs 1 lakh crore, is in view of the widening differential between the price of power from these projects and the much lower prices discovered under recent auctions.
In the instant TN case, in which the the appellant was the National Solar Energy Federation of India, the Aptel ordered that for the period March 1 to June 30, 2017, the the state-run power generation/distribution utility TANGEDCO and load despatch centre TNSLDC will jointly pay the compensation for 1,080 blocks considered by POSOCO, at the rate of 75% of PPA tariff per unit at an interest rate of 9% within 60 days from the date of this order. Separate computation will be done for individual members of the developers association.
A review by POSOCO had found that only 5.26% of the cases of back down instructions appeared to justified from the grid security perspective, which was cited by TANGEDCO-TNSLDC. The tribunal stated that “TANGEDCO and TNSLDC were hand in glove in violating the provisions of Grid code for the commercial benefit of TANGEDCO. It is also apparent that the members of the Appellant Association have suffered financial loss as a result of the actions of TNSLDC and TANGEDCO.”
Since the misfeasance has been established against TANGEDCO and TNSLDC, the solar developers are entitled to claim the compensation from TNSLDC and TANGEDCO. “Both these entities shall jointly pay the compensation to the members of the Appellant Association,” as per the order.
“POSOCO shall carryout similar exercise for the period up to 31.10.2020 on the same lines and submit report to Respondent Commission within 3 months. Tamil Nadu SLDC and Appellant are directed to submit details to POSOCO,” the order stated.
The order stated curtailments of renewable energy for reasons other than grid security will be compensated at the PPA tariffs. The compensation shall be based on the methodology adopted in the POSOCO report, it mentioned, in what could act as deterrent to such practice.
POSOCO has been directed to keep the report on its website while the state load dispatch centre will submit a monthly report to the state electricity regulatory commission with detailed reasons for any backing down instructions issued to solar power plants. “The above guiding factors stipulated by us would apply till such time the Forum of Regulators or the Centre formulates guidelines in relation to curtailment of renewable energy,” the order noted.
It has been claimed that TANGEDCO issued orders asking the solar plants to cease generation for as much as 7 to 10 hours in a day comprising of the peak generation period out of 12 hours of generation in a day. APTEL noted since solar power tariff is single part and it is predominantly fixed cost in nature, unauthorised curtailment will ultimately result in solar generators failing to repay their loans. “If such actions are not penalised, the unauthorised curtailment will go unabated jeopardising the whole objective and intent of the Act,” Aptel noted.
According to data compiled by the Central Electricity Authority, the state-run intermediary Seci has not been able to sign PSAs with any state discom for 6,000 MW of solar projects, out of the 13,816 MW, under-construction. These are in addition to 12,000 MW capacity to be built under the manufacturing-linked solar scheme, which also do not have any buyer at present.