Tariff Disputes Threaten to Stall 970 MW of Solar Projects in Karnataka

 In Karnataka, which is also India’s top solar state, 970 MW of grid-connected solar photovoltaic (PV) projects have been embroiled in a tariff dispute. This situation arose after the procurers and power traders could not arrive at a mutually agreed tariff for the sale of power generated from these projects. However,  the timely intervention by the Appellate Tribunal for Electricity (APTEL) saved the day for Solar Energy Corporation of India (SECI).

SECI had auctioned 970 MW of grid-connected solar PV projects under the government’s viability gap funding (VGF) program back in 2016. According to Mercom’s India Solar Project Tracker, SECI had auctioned 13 solar projects totaling 970 MW at a tariff of ₹4.43 (~$0.061)/kWh.

According to a document reviewed by Mercom, when SECI filed the approval petition for power sale agreement (PSA) to be executed between SECI and Karnataka distribution companies, Bangalore Electricity Supply Company (BESCOM) raised its concern about the tariff of ₹4.50 (`$0.062)/kWh which was quoted by SECI in the PSA, but was not the tariff discovered in the auction.

BESCOM also pointed out to the Karnataka Electricity Regulatory Commission (KERC) that SECI had omitted certain terms and clauses relating to general charges payable by generators in the PSA.

The KERC in turn had asked the parties to file a fresh petition and ordered them to sell the power from the solar projects at a tariff of ₹4.36 (~$0.060)/kWh until the final decision.

Later, SECI approached APTEL as the tariff discovered in the auction was ₹4.43 (~$0.061)/kWh, which was ₹0.07/kWh more than the tariff fixed by KERC (₹4.36/kWh) for the sale of power from the solar PV projects.

When asked to comment on the development, a Karnataka State Energy Department official informed that even the KERC order was not final and it had fixed tariff of ₹4.36 (~$0.060)/kWh until the final decision could be taken. “The KERC just wanted all the documents to be submitted and all the issues of contention pointed out by DISCOMs to be sorted out by SECI. But we can also understand that it is not possible for a power trader to purchase at a higher cost and sell at a lower cost,” the official told Mercom.

The APTEL, after considering SECI’s appeal, fixed an interim tariff of ₹4.50 (~$0.062)/kWh for the procurement of power from the solar PV projects. The APTEL has put a stay on the KERC order for now.

When contacted, a SECI official said, “Yes, the APTEL has fixed a tariff of ₹4.50 (~$0.062)/kWh for the procurement from the solar PV projects in question. A stay has been put by APTEL on KERC’s order.”

Image credit: FRV