The Central Electricity Regulatory Commission (CERC) has approved a tariff of ₹2.54 (~$0.03)/kWh for a combined capacity of 334 MW from solar power projects of the Solar Energy Corporation of India Limited (SECI). The Commission also approved a trading margin of ₹0.07 ($0.00084)/kWh.

The Commission, however, rejected one of the respondents, Adani Green’s Change in Law request in response to SECI’s petition. It noted that the respondent cannot seek this relief in SECI’s petition and should file a separate petition for Change in Law approval under Article 12.2 of the power purchase agreement (PPA).

Background

SECI filed a petition to set tariff rates for 334 MW solar power projects connected to the ISTS through competitive bidding, as per the provisions of the Electricity Act of 2003. They also sought an exemption from submitting extensive hard copies of tender documents, Power Purchase Agreements PPAs, and Power Sale Agreements PSA).

In June 2019, SECI issued a tender for a 7 GW ISTS-connected solar power project, linked with establishing a 2 GW solar manufacturing facility, following the “Guidelines for Tariff-Based Competitive Bidding Process for Procurement of Power Grid Connected Solar PV Power Projects.”

The tender was split into two packages: Package A, focused on cell and module production with 1,000 MW capacity (500 MW each), and Package B, aimed at ingot and wafer manufacturing, also with 1,000 MW capacity (500 MW each).

Successful bidders were promised PPAs for 2,000 MW in Package A and 1,500 MW in Package B.

Three bids were received for Package A, totaling 8,000 MW, while Package B received no responses. All three Package A bids proceeded to the financial bid evaluation stage, with Azure Power and Adani Green Energy Four awarded 2,000 MW each at a tariff of ₹2.92 (~$0.03)/kWh.

The unclaimed 4,000 MW capacity from Package B was transferred to Package A, increasing its total capacity to 8,000 MW for the solar power project and 2,000 MW for solar manufacturing.

This extra capacity, equivalent to 4,000 MW of solar power and 1,000 MW of solar manufacturing, was offered to all three original bidders. Adani Green accepted it at a tariff of ₹2.92 (~$0.03)/kWh.

A greenshoe option was introduced for Azure Power and Adani Green, granting them an additional 2,000 MW each, in addition to their initial allocations, at a tariff of ₹2.92 (~$0.03)/kWh.

On December 10, 2019, SECI issued Letters of Award (LoA) to both successful bidders. Azure Power and Adani Green accepted the additional capacity offered under the greenshoe option in letters dated December 16, 2019.

In June and July of 2020, SECI issued supplements to the LoA, confirming the final awarded capacities: 4,000 MW to Azure Power and 8,000 MW to Adani Green, both at a tariff of ₹2.92 (~$0.03)/kWh.

On July 15, 2021, Adani Green and Azure Power voluntarily reduced their tariff to ₹2.54 (~$0.030)/kWh for 3,000 MW in Package-I. SECI entered PPAs with them at this revised tariff, signing PSAs for 1,800 MW with entities, including 500 MW for Grid Corporation of Odisha Limited (GRIDCO), 300 MW for Chhattisgarh State Power Distribution Company Limited (CSPDCL,) and 1,000 MW for Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO).

On November 3, 2021, both companies further reduced their tariff to ₹2.42 (~$0.029)/kWh for the remaining packages (Package II, Package III, and Package IV). SECI entered PPAs at this revised tariff for 7,000 MW and signed PSAs with distribution utilities in Andhra Pradesh.

SECI petitioned to approve these revised tariffs on March 22, 2022, covering 1,800 MW under Package I and 7,000 MW across Packages II, III, and IV, involving 4,667 MW from Adani Green and 2,333 MW from Azure Power.

The Commission approved the tariff for 8,900 MW on April 2, 2022, from the signed PPAs and PSAs. Additionally, SECI signed new PPAs for an extra 334 MW under Package-I with successful bidders and designated companies.

SECI also signed PSAs with Brihanmumbai Electric Supply and Transport (BEST) for 234 MW and with Tripura State Electricity Corporation (TSECL) for 100 MW, expected to be commissioned in the financial year 2024-25, aiming to help distribution companies meet their Renewable Purchase Obligations (RPOs).

A trading margin of ₹0.07 (~$0.00084)/kWh, as agreed in the PSAs by distribution companies, was petitioned to be added to the tariff.

SECI filed a petition on September 15, 2023, to adopt a tariff for an additional 334 MW under Package I, as allowed by the Commission’s order dated April 2, 2022.

In response, Adani Green Energy Twenty-Six A filed a reply on October 12, 2023, requesting recognition of Change in Law events related to GST rate changes and Basics Custom Duty (BCD) imposition on inverters and trackers, which occurred after the bid submission date.

It highlighted this would lead to additional costs for solar power generators.

Commission’s Analysis

The Commission stated that it had examined the competitive bidding process under Section 63 of the Act and confirmed that the tariff was determined transparently.

It had previously approved the tariff for 8,900 MW. It granted SECI the liberty to approach it for the remaining capacity’s tariff adoption once tied up with PPAs and PSAs, which SECI did after signing PPAs at a tariff of Rs. 2.54/kWh for 334 MW in Package-I.

The Commission decided to adopt the individual tariffs for the solar power projects with a 334 MW capacity, as agreed upon by successful bidders and included in the PPAs based on PSAs with distribution licensees.

The trading margin of ₹0.07 (~$0.00084)/kWh, as agreed in the PSAs, will be applicable. However, if SECI fails to provide an escrow arrangement or irrevocable, unconditional, and revolving letter of credit to the solar generators, the trading margin shall be limited to ₹0.02 (~$0.00024)/kWh.

The Commission rejected Adani Green’s request for a Change in Law and advised it to file a separate petition.

Recently, CERC directed the Grid Controller of India to organize two Renewable Energy Certificate trading sessions every month– the second and last Wednesday of each month– for the upcoming six months, starting from October.

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