CERC Rules in Favor of Solar Developer ACME, Asks PGCIL To Grant Medium-Term Open Access

In response to a petition by ACME Holding, the Central Electricity Regulatory Commission (CERC) has asked Power Grid Corporation of India Limited (PGCIL) to notify ACME the date of operationalization of medium-term open access (MTOA) so that it can take appropriate steps for the synchronization of its solar project.

The commission has directed the respondent to file its reply by October 10, 2019. The PGCIL has also been directed by CERC to not take any coercive measures against the petitioners (ACME) until the next date of hearing, which is on October 15, 2019.

Background

ACME Solar Holdings Limited and ACME Chittorgarh Solar Energy Private Limited, jointly filed a petition seeking to quash the letter dated July 2, 2019, issued by PGCIL, directing the petitioners to open the letter of credit.



The first petitioner, ACME Holding, had participated in the bidding process initiated by Maharashtra State Electricity Distribution Company Limited (MSEDCL) for 1 GW of solar power projects through competitive bidding. Later, it was declared a successful bidder to develop a 250 MW solar project, which is located at Badisid in Rajasthan.

The lowest tariff quoted was ₹2.71 (~$0.0401)/kWh in the auction held by MSEDCL to develop 1 GW of solar projects in the state. This was the lowest solar tariff for a grid-connected solar PV project in Maharashtra. ReNew Power and ACME Solar Holdings had quoted ₹2.72 (~$0.0402)/kWh to develop 250 MW each.

In 2018, PGCIL granted stage -I and stage-II connectivity to ACME Holdings.

On August 23, 2018, ACME Holdings made an application to PGCIL for granting long-term access (LTA). The PGCIL then requested ACME Holdings to apply for MTOA (medium-term open access) since the LTA was not ready to which the firm complied.

However, later in January 2019, PGCIL intimated ACME about the grant of MTOA against the already applied LTA for the evacuation of 250 MW of solar power.

Through its letter dated July 2, 2019, PGCIL informed ACME Holdings that it needs to furnish a letter of credit for ₹256.5 million (~$3.62 million) in favor of PGCIL towards payment security mechanism.

The petitioner has mentioned that, to date, PGCIL has not indicated the date of the operationalization of MTOA. As per the MTOA agreement, PGCIL is required to put into operation its assets by September 16, 2019.

According to the petition, “ACME Holdings is required to give at least 30 days’ notice to MSEDCL for synchronization, but due to non-responsiveness of PGCIL, ACME Holdings has been compelled to forego its right of early commissioning of its generating station.”

The petitioner has expressed apprehension that PGCIL may cancel the MTOA granted to ACME Holdings, which will have a “detrimental financial impact on the project.”

Based on these developments, the ACME Holdings and ACME Chittorgarh Solar Energy Private Limited filed a petition requesting the commission to quash the letter dated July 2, 2019, issued by PGCIL and hold that it is illegal and arbitrary. It has requested the commission to declare that the petitioner is not liable to open any letter of credit as a payment security mechanism.

The petitioners also requested the commission to direct PGCIL to allow the company to connect, synchronize, test, and commission its project without demanding the letter of credit and further direct it to not to take any coercive action, including the termination or cancellation of LTOA or MTOA.

After going through the petition, the commission has asked PGCIL to file its reply and in the meantime, not initiate any coercive action against ACME. It has also directed PGCIL to inform ACME about the likely date of operationalization of the MTOA so that it can make necessary preparations. It has provided 15 days for PGCIL to notify the date of operationalization of the MTOA.