WIND TARIFF HAS HIT A NEW LOW IN A REVERSE AUCTION HELD BY GUVNL

E-reverse auction for grid connected wind project of 500 MW in Gujarat which took place on 21 December 2017 saw the tariffs dipping to a historically low value of Rs 2.44/kWh. This is lower than the price determined in the second auction for SECI’s 1 GW wind capacity by Rs 0.21/kWh.

 

The lowest tariff was quoted by Sprng Energy Pvt Ltd and K.P. Energy Ltd for capacities of 197.5 MW and 30 MW respectively.  Following graph depicts the trends followed by wind tariff in this year:

 

GUVNL’S BIDDING FETCHES TARIFF OF Rs 2.65

In a bidding which took place on 19th September 2017 for a 500 MW solar plant of Gujarat Urja Vikas Nigam Ltd. (GUVNL), the lowest price determined was Rs 2.65 per unit. This was slightly higher than the price of Rs 2.44 determined in the last reverse bidding by SECI. This increase in the price determined was attributed to the implementation of GST and the increase in the cost of solar panels being imported from China.

A continuous decreasing trend has been seen in the tariff determined for solar projects in the Country this year. The following graph determines the trend in prices of solar power determined in the past:

The article can be accessed here.

GERC Maintains Leniency over RPO Compliance

The Gujarat Electricity Regulatory Commission (GERC) in its orders Dated 16th Jan 2015, has given relief to the state distribution companies against their RPO compliance for the year 13-14. The summary of the GERC orders is given below:

 Orders on GUVNL: GUVNL complied with 5.26% out of 6% obligations for non-solar and achieved 2.18% of Solar against 1% obligation. But overall attained a renewable purchase level of 7.44% against the RPO of 7%. Highlighting this the GUVNL requested before the commission to adjust its excess solar energy purchased into the non-compliance in the Non-solar part. While the Indian Wind Energy Association (IWPA) objected saying that this would result in loss for the wind generators as there is huge amount of Non-solar REC’s available for purchase.

 The commission in its order granted the permission for adjusting the excess purchase by GUVNL from Solar against the wind and other category compliance saying that the solar energy is costlier than the Non-solar energy and further more purchase of non-solar renewable would result in an additional burden on consumers of the distribution licensee.

Order on MPSEZ Utilities – MPSEZ Utilities submitted that it is having a revenue gap and therefore the enforcement of RPO on them will further burden the deemed licensees of SEZ areas. The commission in the order said that looking to the nascent stage of operation of the deemed distribution licensees of SEZ and quantum of power requirement by them for fulfillment of RPO, which is very less, so the commission exempted the licensee from applicability of RPO for FY 13-14.

 Order on Torrent Power ltd. – Torrent power submitted that it has complied with RPO of 4.55% in case of Non-solar against total 6%, and solar RPO of .07% against 1% in the regulation. Saying that due to non-availability of Renewable Energy and factors beyond control, which lead to shortfall in RPO compliance for FY13-14. And requested before commission to revise the RPO percentage of FY 13-14 to the actual targets achieved by the company. IWPA in its submission said that the distribution company had the option of redeeming REC’s from exchange, as huge no. of solar and non-solar REC’s are available for sell.

 The commission in the order said that the petitioner has made sufficient efforts to fulfill the solar and non-solar energy and REC’s as well, also said due to non-availability of renewable energy and factors beyond controlled resulted in shortfall in RPO compliance. And said that any further purchase of REC’s will result in the burden for consumers hence we cannot force the petitioner to buy more REC’s. The commission ordered to revise the RPO of the petitioner company as non-solar RPO at 4.55 % and Solar RPO at 0.07 % for FY 2013-14.

 The decision of GERC to allow the defaulted distribution companies, adjusting their non-renewable RPO with their excess solar energy, and waiving off RPO for Deemed Distribution licensees (Torrent Energy Ltd and MPSEZ Utilities Pvt. Ltd.), and also reducing RPO to match the extent of sourced energy, will adversely impact the REC market which is going through a bad stage.

 These steps even though appear to be practical may give other states chance to be more lenient over RPO enforcement, which could result in effecting the renewable industry badly as they rely on strict RPO enforcement. The step of giving solar power beneficial treatment over other RE power could be discouraging to other RE generators. May be the stagnancy in the REC market is the result of domino effect started by GERC and some other regulatory commissions.

The GERC Order on GUVNL & MPSEZ can be accessed here, and the order on torrent power can be accessed here.

GERC Computes Additional Surcharge

Gujarat Electricity Regulatory Commission (GERC) in its order dated 25th September 2014 has computed the additional surcharge payable by the Open Access Consumers for the control period of 1st October 2014 to 31st March 2015.

The order has come as per the GERC Open Access Regulation which states that additional surcharge shall be determined every 6 months periods.

The GUVNL (Gujarat Urja Vikas Nigam Limited) furnished the data to the commission as per the guidelines defined and proposed an additional surcharge of Rs. 0.33/kWh.

The commission in its order based on the data submitted by GUVNL, approved additional surcharge at Rs. 0.26/kWh.

The Additional Surcharge will be applicable to the consumers of MGVCL, UGVCL, PGVCL and DGVCL, who avail power through open access from any source other than their respective DISCOMs and will be applicable for the open access transaction commencing from 1st October, 2014 to 31th March, 2015.

The relevant order can be accessed here.

Our previous blog post on APTEL order on solar tariff of Gujarat can be read here.

Contributed by Dheeraj Babariya.

APTEL’s Judgement on Solar Tariffs in Gujarat

Gujarat Urja Vikas Nigam Limited (GUVNL), had filed a petition before Gujarat Electricity Regulatory Commission in 2013, asking for revision in Solar Tariffs determined by the commission in its order dated 29th January, 2010. The state commission, after hearing the parties, had dismissed this petition.

Aggrieved by this, GUVNL appealed to the Appellate Tribunal for Electricity (APTEL) against the stand taken by GERC. APTEL, after hearing all parties, gave its judgement, on 22nd August 2014, that the petition filed by GUVNL does not hold merit and rightly stands dismissed by GERC.

The following are some of the reasons cited by APTEL for its judgement:

  1. GUVNL quoted reduction of Customs and Excise duties in 2010, to justify reduction in tariff, but it did not approach the commission in 2010. The projects were commissioned by end of 2012, after which GUVNL appealed in 2013.
  2. There is no ‘Change in Law’ clause in the PPA agreement between GUVNL and the project developers.
  3. GERC, while determining the tariffs in 2010, was conscious about the change in environment, and thus fixed the tariff for 25 years, with multiple control periods, so as to review and determine tariffs for each control period as and when required.
  4. Generic tariff order on normative parameters cannot be reviewed for changes that occour during project development.
  5. The project developers have acted as per the tariff order, and withdrawing the incentives now is not justified, as the projects are already running.
  6. PPA can be opened only for giving thrust to renewable energy projects, and not for curtailing the incentives.

As per the Solar Tariff order dated 29th January, 2010, the tariff determined is shown below:

The APTEL judgement can be accessed here.

Gujarat order on Solar Tariff can be accessed here.

Contributed by: Siddhartha

Gujarat DISCOMs approach CERC to seek REC benefits

Gujarat Urja Vikas Nigam Limited (GUVNL) on behalf of DISCOMs , had approached Hon’ble CERC for certain amendments to REC regulations, enabling the former to claim solar RECs as “Eligible Entity” for excess procurement over & above the stipulated RPO targets. GUVNL had submitted (in Petition no. 128/MP/2013) that dis-allowance of RECs for excess solar power procurement after meeting RPO targets, is a disincentive  for DISCOMs who have been buying solar power at promotional tariffs with an aim to promote solar power generation in the state.

The matter is unprecedented because an obligated entity (usually a buyer of RECs) wants to claim RECs for excess power procurement and not excess power generation.

In the order dated 2nd Dec 2013 (refer), GUVNL brought forward that DISCOMs had to tie up solar capacity of 380 MW to comply with RPO targets (of 1% in FY13). DISCOMs in-fact have signed PPAs of 971.5 MW solar capacity, that too at promotional tariffs.

GUVNL has also argued that buying costly solar power from developers is going to financially impact the consumers in the state as the higher cost of power procurement is passed on to them. To abrogate such a case, it proposes to claim RECs which will reward DISCOMs as well as take care of consumer interests.  GUVNL also requested for a provision where RPO surplus DISCOMs are allowed to exchange RECs with RPO deficit ones by bypassing prevailing exchange based transactions. In our view, this particular demand questions the very purpose of having a double side closed fair market-based mechanism for RECs.

GUVNL had also prayed the apex commission puts in place a uniform solar RPO target for all states in India.

CERC, in the order, is of the view that current regulations stipulating generators only for claiming RECs is adequate for a healthy REC market. Hon’ble commissions decision can be read as –

“The Commission is of the view that the existing provisions of eligibility in the  REC Regulations which is limited to generating companies is adequate at this stage of development of REC market. Without going into the merit of the issues raised, we intend to clarify that filing of the petition is not the proper process for initiating the amendment to the existing regulations. The Commission under Section 178 of the Act has been vested with the power to make, amend and repeal the regulations on the subjects which have been authorized under various provisions of the Act. Action to make or amend the regulations is initiated when the Commission is satisfied that there is need for such regulations or amendment to the existing regulations.”

However, the commission directed its staff to analyse the issue and come up with an appropriate proposal for consideration.

According to Press Information Bureau (Release ID :103402) the matter was brought to light by Hon’ble Minister of New & Renewable Energy in the Lok Sabha (on 7th Feb 2014). In a written reply Hon’ble Minister quoted that obligated entities were free to procure power over and above RPO targets and that any changes to existing regulations is a quasi-judicial process and the CERC takes a view after following due process of law including public hearing. 

GERC waives RPO shortfall; second year of non-compliance

In a very disappointing order, the Gujarat State Electricity Commission (GERC) decided to waive off the shortfall in RPO for the year 2012-13. In a petition filed by the Discoms, they had asked for a waiver on the grounds that not enough RE capacity was commissioned in the state and even from those commissioned, several developers opted for the REC mechanism. GERC interpreted CERC’s REC regulations to apply mainly to non-RE resource states.

Its order states:

“From the above [reading of the CERC regulations], it transpires that the REC was introduced for the fulfillment of RPO for the States who are not having geographical conditions which is suited for RE generations and due to which they are unable to comply with the RPO envisaged in NAPPCCC and the Electricity Act, 2003. However, the State of Gujarat has very high potential of wind and solar generation. But the distribution licensees in the State could not fulfill their non-solar RPO due to lower capacity addition and unwillingness of the Wind Generators to supply electricity at the preferential tariff determined by the Commission. Under such a condition, procurement of RECs, would unjustifiably burden the consumers of the State.”

It is interesting to note that in the assessment of RPO compliance for the year 2011-12, GERC had allowed a roll-forward of RPO on the grounds that sufficient RECs were not available.

From the order of 2011-12:

“Non-compliance was primarily due to non-availability of RE power. Though the REC mechanism has been introduced to meet such contingency, availability of RECs was also not adequate. Further, no solar REC was available during the F.Y 2011-12. We, therefore, decide to carry forward the shortfall in procurement of renewable energy during FY 2011-13 by the aforesaid entities to FY 2012-2013.”

Further, GERC’s regulations clearly provide that purchase of RECs is a valid way to meet RPO. This year, GERC even decided to do away with the formality of a roll-forward and instead waived the entire shortfall:

“As pointed out above, both GUVNL and Torrent Power have made sincere efforts to fulfill their obligation under the RPO Regulations. They have been able to establish the fact of non-availability of renewable energy power in the market and also the lack of interest on the part of renewable energy power generators in concluding Power Purchase Agreements with the utilities despite the revision of the wind tariff by the Commission.”

“Any carry forward of the same would add to the burden on the licensees and the consumers. In view of the above, we decide to revise the RPO for the year 2012-13 at actual for the year as a special case in view of the prevailing market conditions at that time.” In our opinion, the order will certainly set a bad precedent for RPO compliance. It is second year in a row that GERC has shied away from enforcing RPO. It provides a strong incentive to Discoms in Gujarat to do even less in the coming year towards fulfilling its obligations.

The order can be read here

Relevant media article – Business Week

Go to top