The Central Electricity Regulatory Commission (CERC) adopted the tariff of ₹2.63 (~₹0.036)/kWh and a trading margin of ₹0.07 (~$0.0009)/kWh for a 300 MW solar project as requested by NTPC  in its petition.

The Commission said that the tariff would remain valid for the entire period of the power purchase agreement (PPA) and the power sale agreement (PSA).  However, the Commission further noted that if NTPC failed to provide a revolving letter of credit to the solar developer, the trading margin would be limited to ₹0.02 (~$0.0003)/kWh.

NTPC had filed a petition to adopt a tariff for 1,200 MW of interstate transmission system (ISTS)-connected solar projects. The tariff was discovered through a competitive bidding process.

Background

NTPC had issued a request for selection for setting up 1,200 MW of ISTS grid-connected solar projects to be set up anywhere in India on August 10, 2019. The e-reverse auction was conducted on October 25, 2019, and TBEA Solar India (TBEA) was declared the successful bidder for the allocated capacity of 300 MW at the tariff of ₹2.63 (~$0.036)/kWh.

Accordingly, NTPC signed a PPA on June 13, 2020, and a supplementary PPA with ABC Renewable Energy, a special purpose vehicle (SPV) created by TBEA. Later, NTPC entered into a back-to-back PSA with the Government of Puducherry to procure 100 MW and with the Madhya Pradesh Power Management Company (MPPMC) for 200 MW.

NTPC, in its submission, said that it had formulated and issued the draft request for selection (RfS), PPA, and PSA in line with the guidelines and amendments. NTPC had also issued the conformity certificate in this respect, stating that the bidding process and evaluation of bids had been carried out in conformity to the provisions of the RfS.

Commission’s analysis

The Commission observed that NTPC had been designated as the nodal agency for implementing the program for setting up ISTS-connected solar or wind power projects and acts as an intermediary agency for purchasing and selling power under the PPAs and PSAs on a back-to-back basis.

The Commission further noted that the solar developer had supported the submissions of NTPC that the concept of placing the affected party to the same economic position (restitution principle) could not be alienated from the provisions of the ‘Change in Law.’

The combined reading of the guidelines of the PPA revealed that there was no deviation from the guidelines by either party while executing the PPA.

The Commission noted that NTPC selected the successful bidders through a transparent bidding process per the guidelines issued by the Ministry of Power (MoP). Hence, the Commission adopted the tariff of ₹2.63 (~$0.036)/kWh for 300 MW of solar power as agreed to by the successful bidder, which would remain valid throughout the period covered in the PPA and PSA.

Further, the Commission noted that NTPC had submitted that in addition to the tariff of ₹2.63 (~$0.036)/kWh, there would be a trading margin of ₹0.07 (~$0.0009)/kWh to be recovered from the distribution licensees (DISCOMs) in terms of the PSA.

CERC noted that distribution licensees had agreed to a trading margin of ₹0.07 (~$0.0009)/kWh as agreed in the PSA, which aligned with the trading license regulations.

“Therefore, in case of failure by NTPC to provide escrow arrangement or irrevocable and revolving letter of credit to the solar generator, the trading margin should be limited to ₹0.02 (~$0.0003)/kWh,” the Commission added.

Subscribe to Mercom’s real-time Regulatory Updates to ensure you don’t miss any critical updates from the renewable industry.